Investors 411 Blog

What if Cuba got $6.6 billion in weapons?

Imagine This

What if China gave/sold $6.6 billion dollars worth of weapons to a country 90 miles off our shore  – CUBA. What would the reaction in the USA be? Chest thumbing 24/7 outrage and our military would move into position. As Popeye (see comments section) point out we just sold $6.6 billions in weapons to Taiwan 90 miles off the China cost.

We want China’s help in sanctions against IRAN growing nuclear threat. How is China going to act now to the American threat of $6.6 billion of new weapons off its shore? How would we react?

Bottom line, – this is feeding the military industrial complex need for profits/wars.

Wanting America and Obama to Fail

Part 2

Nobel Prize winner Paul Krugman editorial today echoed the problems Investor411 brought up Friday when Senator Shelby held up held up 70 top government appointments over two pet pork projects. In fact, other Senators are doing the same.

Obama’s, Press Secretary, called Shelby’s individual filibuster “silly.”  Silly? – The whole White House need to drink a quart of testosterone – Where is he fight that dominated the Obama campaign?

Falling Euro’s Threat to America.

Many, smaller European companies are on the verge of default. Obviously, Credit Default Swaps are traded on their bonds. So nobody knows just how mush of the debt they have and probably more importantly taking bets on there success and failures.

Simon Johnson , MIT prof and former Chief Economist of the World Bank has an editorial on this.  Basically the Euro will get weaker relative to the USA and this will help European socks, but also push American stocks higher.  Mantra for months has been stronger dollar = weaker US markets. Compare a chart of the Dollar ($USD) and the SPX (S&P 500)

Here’s the problem nobody knows how bad or over leveraged things exactly are because there was little regulation. – just like the theUSAUSA.

Who is Killing Financial Reform?

Robert Reich has a must read editorial on Democrats, lobbyist, and others who are involved in killing financial reform. It’s been over a year since Lehmann crash and nothings been done to fix shadow banks.

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 5 years of beating benchmark S&P 500 and almost all major US indexes

Technicals, Fundamentals & Analysis

See Positions , Strategy , and Overview for changes made over weekend.

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Significant indexes – Forecasting tools for market direction

• McClellan Index fell to -69.02 = Still Oversold. How low or oversold can markets get before rebounding. We did reach @-93 about 3 days ago, about @-115 last November & @ -130 back in the fall of 2008 .Since +60 is overbought & a sell signal – we are 130 points away from that and only 60 away from the HUGE Nov 2008 crash (see chart) Bad numbers are Bullish

• BDI – This chart shows the Baltic Dry Index (scroll down) , a measure of shipping costs, Has broken through a major month long  support level at @ 3000 .  Yesterday the BDI rose +30 at 2715. This is the second day of a rebound that will have to get above 3000 to be meaningful.
• $USD -The USD moved up dramatically as stocks fell lasst week.  As discussed many times before a rising dollar hurts US stocks because our goods cost more to export Rising Dollar = Bearish for Stocks

Fearless Forecast – We’re in for a buppy ride – Hard to value the extent of the European Debt problem – So when you don’t knoe investors almost always paly it safe and that means sell – Down Week – Buying the dips

Positions

The  Positions Section (also at top of blog) has the latest buys and sells – Revised positions over weekend) – These are positions I actually own

SELLING & BUYING

Here’s stocks YOU suggested  to add to the Watch List. – Will try to analyze stocks over weekend.
GS, JPM, CSCO, SHOO, ICON, SOA, ALF, VSEC, BIDU VPRT (tomorrow)

Still adding to positions. The more the McClellan dips the more you should add

The strategy .  Buy a position in an oversold market and sell 1/2 of it when it gains 5 to 10% and let the rest ride.  The position should take into account major trends that you understand. For me China, Emerging Markets and Brazil still fit the bill. However there are concerns about a long term US/China trade war. Also any of the ETF’s that do 2 & 3 X what the major US indexes do.

Bottom Line – We are oversold and ready for at least a short term run – Investors 411 opened a 5% position in TYH (3x financials) Friday at 117.14 A short term trade with a tight stop at 177.14.  Will take 1/2 profits at 5%+ rise

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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Wanting Obama & America to Fail

I may criticize Obama and before him Bush, but I never wanted them to fail. Our politicians have gotten so partisan that Obama’s failure has become far more important than solving problems that confront our country and the world.

Richard Shelby (Powerful Republican Senate finance committee minority leader) – has held up 70 Obama appointments because he wants “earmarks” (special compensation) for his state of Alabama. The Huffington Post  labeled him Mr. Roadblock after Shelby held up the nomination for chief of the General Services Office for 10 Months . She passed 96 to 0 . Additional story here . Buying votes has overwhelmed US politics. But this case was just way too blatent.

PIGS

- World Market’s stocks plunged in an aftershock of the financial earthquake that hit last Oct. 2008. In 2008 it was the huge shadow banks that stood on the brink of collapse from over leveraged debt bombs called Credit Default Swaps.  Iceland’s economy is still shattered because it took on too much OVER LEVERAGED debt.

P ortugal, I reland, G reece, and S pain are now in trouble. You can add Great Britain and all the former Soviet satellite countries.  They bought into the unregulated free market capitalism and now like financials are suffering.  They are selling their debt at much higher prices than we are.  Are other countries going to fall like Iceland?- Bill Gross (big bond seller) editorial

Here’s the problem nobody knows how bad or over leveraged things exactly are because there was little regulation.

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 5 years of beating benchmark S&P 500 and almost all major US indexes

Technicals, Fundamentals & Analysis

See Positions , Strategy , and Overview for changes made over weekend.

Worldwide stocks dropped in big, above average volume on fears of a credit meltdown in Europe. (See above) This, added to China and some other emerging markets pulling back on stimulus has driven all major indexes to yearly lows = Bearish

Jobs number -  Headlines -20,000 job losses in January (about what was expected) 9.7% Unemployment rate . Don’t understand how they got this number – down -0.3 % and not seeing job creation).  Seems implausible. They did a yearly revaluation. Basically this is good news for stocks .

Significant indexes

• McClellan Index fell to -70.88 = Oversold. How low or oversold can markets get before rebounding. We did reach @-93 about 3 days ago, about @-115 last November & @ -130 back in the fall of 2008.

• BDI – This chart shows the Baltic Dry Index (scroll down) , a measure of shipping costs, Has broken through a major month long  support level at @ 3000 .  Yesterday the BDI rose +12 at 2685.

Analysis – Oversold conditions means we are closer to a buy than a sell. Two major questions.

• Is this correction going to grow? Technically the answer seems to be yes . The charts are showing now 4 major down days in big volume. We are at yearly lows and the McClellan Oscillator is at -71. 3 trading days ago we hit -93 and the markets were at a higher low. All this is Bearish but oversold markets are when to buy.
  
• How to play the dip When everyone else sells you buy. The bigger the dip the better your chances. Of course this works best for a short term trader, who is willing to buy the dip and sell a few days/week later.  The more a longer term investor is in cash- the more its time to nibble.
  

Positions

The  Positions Section (also at top of blog) has the latest buys and sells (Usually updated over weekends – will try to update last few weeks today) – These are positions I actually own

SELLING & BUYING

Here’s stocks YOU suggested  to add to the Watch List. – Will try to analyze stocks over weekend.
GS, JPM, CSCO, SHOO, ICON, SOA, ALF, VSEC, BIDU VPRT

ETF’s -  6% of portfolio FXI (China), 5% EWZ (Brazil), & 10% MOO (Agriculture) -  Total 21% invested. Sold 1/2 position or 5% of portfolio of EWZ yesterday at $65.1 . This was bought at $52.8 back in July. A +23% gain

I will be adding to positions (hopefully long term) today, hopefully in a dip.

The strategy .  Buy a position in an oversold market and sell 1/2 of it when it gains 5 to 10% and let the rest ride.  The position should take into account major trends that you understand. For me China, Emerging Markets and Brazil still fit the bill. However there are concerns about a long term US/China trade war. Also any of the ETF’s that do 2 & 3 X what the major US indexes do.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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National Georaphic – Great Wall of China (Emerging Markets)

Trends, Wars, & YOUR Money

Investors411 has followed 3 or 4 major investment trends over the last decade - Globalization, Peak Oil, Spread the Wealth & The Great Recession (the later needs some revision).  Global politics and events have impacted these trends and therefore investment choices.

• Fall 2008s financial meltdown proved again Free markets need regulations or they form boom and bust cycles . Even, arguably, the #1 proponent of self regulating free markets Alan Greenspan admitted he was wrong
• Working middle class taxpayers in the USA and around the world bailed unregulated markets with stimulus, packages, printing money, TARP programs, taxes , etc. This was socialism for the rich . It further expanded the gulf between the rich and poor in many countries.
• Emerging markets have kicked our asses as far as growth is concerned for almost a decade. Globalization and Spreading the Wealth to a growing, not shrinking, working class were the primary causes behind this.
• Most emerging markets have a managed or planned economy vs. our more unregulated economy. Few emerging markets were involved in highly speculative trading vehicles (example – Credit Default Swaps)

More recent events impacting trends.

• Wars - The US weapons budget has exploded over the last decade to the #1 budget sector and to @ 50% of the world spends on weapons. Obama has increased the weapons budget and the secret war in Pakistan is no longer a secret.
• Trade war brewing – Relationship between the world’s #1 economy and the world’s fastest growing economy is souring. Check out NYT’s stories on China over last few months
• China – has moved to defuse a growing housing (people moving to cities for better jobs) and a possible  inflation bubble before it pops. Decent month old editorial on this. Remember Chinese banks did NOT sell credit default swaps on housing, so this housing bubble is not as sever as USA’s. But, this is still a serious problem.
• JOBS – While the job losses have declined in the USA from -700,000 to @ -50,000 a month, we increased last month. Obviously US jobs over the last decade have been lost to globalization and consumers in the USA are now saving more. Considering the above 3 bullet points its hard to see stimulus plan alone keep this figure from flattening or falling. (more later)

Bottom Line – Let’s try to be as objective as possible and look at the technicals. In this case, the chart of either the FXI (China) or EEM (Emerging Markets)

Both charts are similar, but China (FXI ) is a little more sever. Notice how fast they exploded in the first 1/2 of 2009 and that growth slowing in the last 1/2. Now for the first time the 50 day moving averages are heading down . In fact China is trading below its 200 day moving average. The countries led us out of recession (Indonesia, Brazil, India, & China never even entered a recession)

It certainly looks like growth has peaked and emerging markets are now in a correction phase.

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 5 years of beating benchmark S&P 500 and almost all major US indexes

Technicals, Fundamentals & Analysis

See Positions , Strategy , and Overview for changes made over weekend.

US Markets basically held onto the significant gains of the last two days – an oversold bounce. Holding onto gains = short term Bullish

CSCO – again had a great earning report and is putting 2000 to 3000 new people to work.

Hard to see a major  move in stocks in front of – The Monthly jobs report t on Friday Each of these reports becomes more and more important.  In November we reached positive job growth (+6,000 ). But this is looking like retailers hiring folks for Christmas buying season.

Best Read of Tea Leaves – You’re NOT going to be happy with the jobs numbers.

Significant indexes

• McClellan Index at -32,18 = We’ve pulled way back from -90 or oversold levels two days ago. Over -60 + Oversold
• BDI – This chart shows the Baltic Dry Index (scroll down) , a measure of shipping costs, Has broken through a major month long  support level at @ 3000 and is keeps falling. Yesterday the BDI closed at  2673.= Bearish However the rate of decline is SLOWING and this almost always indicates at least a short term reversal.
  

Positions

The  Positions Section (also at top of blog) has the latest buys and sells (Usually updated over weekends – will try to update last few weeks today) – These are positions I actually own

SELLING & BUYING

Thanks to 5 of you who sent in suggestions fo r Stock Watch Lis t!

ETF’s – were still 6% FXI (China), 10% EWZ (Brazil), & 10% MOO (Agriculture) – Since we have rallied would consider selling  another 5% (hopefully in a rally – which seems unlikely today)

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

2010 Future?

Pakistan, Iran, Iraq, China and Future Wars

The NYT is carrying an ominous front page story on 3 Americans dying in Pakistan . And you thought there were NO US troops in Pakistan.

How the Pakistan media portrays the US – 123 civilians killed & 3 al Qaeda fighters in drone attacks January. US to increase drone attacks by 75% Only 9% of Pakistani’s support these drone attacks. The opposition Muslim party is by far the now the most popular and their mantra is “Go America Go ” – Hint – they are not cheering us on, but telling us to get out.

Combine this with our growing problems in Yemen, Iran & China (see yesterday’s Investors411) and 2010 is shaping up to be another year where animosity between the US and the rest of the world grows. Recently the NYT reported that over 30 other US companies besides Google were hacked in China. The China/US economic relationship is key to the growth of their and the world’s economic well being.

Check out Popeye’s comments on right of blog. I’m certainly not as strongly anti Obama as he is, but he brings up some good points. Especially, the American media failed to mention that NATO refused to send 10,000 more troops to Afghanistan.  Once again another “coalition of the willing” seems to be breaking down.

Perhaps the real reason for the troop escalation in Afghanistan is preparation for an invasion of Iran . We now will have over 100,000 troops on both sides of Iran – In Iraq & Afghanistan. Best blog for educated inside information continues to be Prof.Coles Informed Comment

Bottom Line – Trend - 2010 looks to be a year of growing instability with the US and the rest of the world. This could have a negative impact on stocks.

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 5 years of beating benchmark S&P 500 and almost all major US indexes

Technicals, Fundamentals & Analysis

See Positions , Strategy , and Overview for changes made over weekend.

US markets rallied significantly again.  This time volume increased and was just above average. Increased volume is what bulls love to see in a 1% or greater rally. But these figures were not the BIG volume bulls want to see and were there when stocks fell over the last few weeks.  So far we have an oversold bounce . Time will tell if it develops into anything.

The major event of this week will be the Monthly jobs report at the end of the week.

February is historically a BAD month for stocks.

Markets had every reason to tank as Obama economic adviser and legendary Fed Chair Paul Volker spoke in front of the Senate Finance committee about breaking up too big to fail banks. Instead, stocks move higher.  Much needed financial reform of the shadow banks looks DOA to investors.

Significant indexes

• McClellan Index at -21.79 = We’ve pulled way back from -90 or oversold levels two days ago.
• BDI – This chart shows the Baltic Dry Index (scroll down) , a measure of shipping costs, Has broken through a major month long  support level at @ 3000 and is still falling. Yesterday the BDI closed at  2691.= Bearish – especially for China. More on this tomorrow)
  

Mistake – Unfortunately, I was away Thursday through Monday.  It looks like Thursday Friday when the McClellan Oscillator hit -70 then -90 was the time to buy.

Chinese stocks bottomed 5 trading days ago and are once again leading US stocks higher.  There is a disconnect or contradiction with the BDI falling. China, whose economy is both export and import driven, should see an INCREASING BDI when its markets grow.

Positions

The  Positions Section (also at top of blog) has the latest buys and sells (Usually updated over weekends – will try to update last few weeks today) – These are positions I actually own

SELLING & BUYING

Stock Watch List

NB – I feel much more confident with ETF’s because they reflect global trends than individual stock. Too many things can go wrong with individual stocks. Click on ticker symbol for chart

• SEED – A China related stock. In a buy the dip position at 50 day moving average
  
• AAPL - Apple’s latest product seems to be a bit of a dud. Former leader now under performing.
  
• HMIN - Failed breakout . China play. Will recover when  China does.  Will drop from list soon
  
• CAAS – Broke down though 50 day, but has rallied last two days in STRONG volume. Tempting
  
• PCLN – Fell below 50 day moving average. Had a good pop in price and volume on Monday. Tempting
  
• F – Now less over extended. Too much recent down day volume. Tempting
• DRWI - Big exporter to China -  Was way too overextended to buy, and now sitting on 50 day MA support level  No big volume as stock dropped= good sign. Buy the dip .
  
• ENOC – New – Reduces costs for utilities – No big volume behind its recent fall. Potential buy the dip .
• ATHN – New - Software reduces costs for health care - Broke its longer term bullish trend in big  volume – Will drop from list soon.
  
• IMAX – Great long term chart – falling back to its 50 day moving average. Outperforming overall market Still a buy the dip opportunity . Investors411 has a 2% of portfolio position in this stock

IMAX still rules. DRWI, SEED & ENOC seem to be the best of the rest. Would open position in any of these on an overall stock market dip.

Looking for a couple new suggestions to YOUR recommended list.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

HMS Titanic

Sipping White Wine

Every year major capitalist leaders from around the world get together at Davos Switzerland and to sample the world’s best wines. This banquet usually sings the praises of globalization and unfettered free markets. But the tone decidedly changed.  France’s President Sarkozy took the lead. What’s unique was wealthy wine sippers went after banks (David Ignatius editorial) in arguably the banking capital of the world – Switzerland. Populism (going after the too big to fail banks and using YOUR tax dollars to bail them out) was popular.

Bottom Line – Volker (who goes in front of Senate Banking committee today) & Obama have both spoken out against the too big to fail shadow banks. The Supreme court has given them added power (see past updates). Remember – for something to get done it has to pass the Senate and Chris Dodd (D – CT) is the chair of the Senate finance committee.  He’s the guy who approved the HUGE bonuses for Wall Street Shadow Banks.

Betraying a Nation

Thanks to Yankee Bob for filling in and bringing to light some credible and different ways of fixing our deficit problem.

If we are on the  sinking economic Titanic and the passengers are running from side to side frantically looking for an answer –  the real question is what is the crew (political leaders) doing about their boat. Even an idiot realizes you cant keep cutting taxes and increasing weapons, social security, medicare/medicaid, which combined with the increasing debt make up 70+% of the budget.

Senators (D – ND) Kent Conrad and (R – NH) Judd Gregg worked for 2 years to form a bipartisan commission to deal with the sacred budget cows that both parties have. Two weeks ago it came to a vote in the Senate and even sponsors of the Bill like (R) John McCain switched sides to vote NO .  In all 22 Democrats , 23 Republicans , 1 Independent were too afraid to vote for this bill.  It failed to win the necessary 60 votes to break a filibuster. (53 yes to 46 no) Here’s a David Broder editorial and a list of the cowards who “Betrayed America. “

Obama promised to form a Presidential Commission to look into this, but it lacks the power of a Senate commission.

Future Wars

We supposedly want China’s support in backing harsh sanctions against Iran .  So The US (Obama) goes ahead with selling $6.4 billion dollars worth of weapons to Taiwan.  China want to have a reconciliation with Taiwan and wants the island to be part of China. China embargo’s  Think we will ever get China to join us with harsher sanctions on Iran?

Like the giant alien plant Seymour in Little Shop of Horrors – the Military Industrial Complex in the USA keeps crying FEED ME

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 5 years of beating benchmark S&P 500 and almost all major US indexes

Technicals, Fundamentals & Analysis

See Positions , Strategy , and Overview for changes made over weekend.

US markets rallied significantly in decreased below average volume. Volume did NOT confirm the rally. Only the NASDQ had volume that was even average.  Yesterday’s trading was an oversold bounce.  Technically, so many traders/investors had sold conditions were oversold (see McCellan Oscillator below) and we ran out of sellers.

Volume, our #1 technical forecasting tool, has indicated a major reversal is potentially underway. Three+ big volume combined with major declines shows major players heading for exits in the last 2+ weeks.

The major event of this week will be the Monthly jobs report at the end of the week. Earnings season is basically over.

Significant indexes

• McClellan Index at -53.52 =  Yesterday we rebounded from over -90 .  We are just below -60 or oversold levels. If everything eles is equal both  long term investors and even short term traders should buy when markets are oversold and sell when they are overbought +60 .
• BDI – This chart shows the Baltic Dry Index (scroll down) , a measure of shipping costs, Has broken through a major month long  support level at @ 3000 and is falling. Yesterday the BDI closed at  2745.= Bearish – especially for China. More on this tomorrow)
  

Fearless Forecast (for week) The US jobs report is critical for Americans, but not Wall Street. Wall Street can grow on profits from abroad. In fact, earnings reports which are getting better each quarter, are mostly improving on growth from emerging markets. China, the #1 emerging market has moved to slow growth and prevent a bubble – this has slowed their economy and stocks over the last month. However, the FXI has rebounded over the last few trading sessions in strong volume = Bullish The BDI is showing the exact opposite of a rebound, but an economy that’s slowing.= Bearish

So we have conflicting signals on China’s growth story. We also know from past experience that US which is still the economic leader worldwide (this position has diminish for a decade and continues to do so) can move significantly higher in weak volume. We saw this form Aug to the end of last year.

Best read of tea leaves – since we are technically oversold we should have an up week . There looks to be no major meltdown in the near future – only a question of will there be a further correction. Technically oversold positions should improve in the short term.

Positions

The  Positions Section (also at top of blog) has the latest buys and sells (Usually updated over weekends – will try to update last few weeks today) – These are positions I actually own

SELLING & BUYING

ETF Watch List

Current owned positions

• FXI (6% of portfolio) China – major technical breakdown of “head & shoulders trading pattern. Bought at @40 Now at @40
  
• EWZ (10% or portfolio) Brazil – Between 50 & 200 day moving average, but in correction. Bought at @ 52 & 59. Now at @67
  
• MOO - (10% of portfolio) Agriculture stocks – Moved below 50 day MA. Bought at 42 Now at@ 42
  
• IMAX – (2% of portfolio) – 3D movie theaters and future TV network. (Will keep adding on each dip) Now at 13.50

Since we are closer to -60 on the McClellan this should be a time to BUY rather than SELL 2010 is NOT going to be the kind of major bullish year 2009 was, but if we add when conditions are oversold you’ll do a whole lot better in the long run. The more oversold the better.

Traders should be able to do well today & early this week because of oversold positions.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING