Dawn over Newton MA

Obama’s Prime Time on BP

Preview here. Major American oil companies & BP will be in front of congress today. The Bottom Line for me is – the transformation to alternative fuels. This is the golden opportunity to make a giant leap forward to alternative energy solutions.

Chaos and lies has surrounded BP (the free market’s) response to this oil spill. Government from the past and present administration has bought BP line for way too long and was caught with its pants down by its ankles. The right wing’s solution is to scream & their drill baby drill mantra.

Perhaps today in front of congress and with Obama there will be the DAWN of some different solutions.

Wonder if oil executives will make the same mistake and arrive in big private jets like the car executives did? Will they get called on it?

Dawn of Financial Reform

The NYT Business section lead story the Volker Reform section of financial reform looks like it will pass! –

“Bankers have all but given up on defeating …would effectively bar federally insured banks from trading for their own accounts”

What this means is that YOUR FDIC insured deposits would NOT be used socialize the risk of banks trading opaque, over leveraged derivatives. Gee instead they might even loan that money to buisnesses and home buyers.

Current war – Blanche Lincoln’s Derivatives reform. See above link. Better email your congressperson or Senator and tell him/her you support Linclon’s bill.

Why Afghanistan?

The Pentagon, yesterday released the reason we  and should continue in Afghanistan, They have perhaps a trillion dollars of minerals. The Iraq war was fought over oil and now the loosing effort in Afghanistan needed an excuse to continue. China could get those minerals instead of us. What happened to terrorism and why is it the war machine – the Pentagon –  doing a report on minerals now?

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

The benchmark S&P 500 fought its to its 200 day moving average/resistance level. Got their in the morning and spent the rest of the day in retreat. = Bearish

One significant data point that investors/traders should remember – Currency markets>Bond Markets>Stock markets. Translation = Because currencies and bonds are so much larger than stock markets they are the DOG that influences how the TAIL (stocks) wags.

With the NYSE up +75 points at it high yesterday – Interday the MO easily reached the +60 or overbought territory. This over bought position added strength to the resistance level and hurt the bulls yesterday. = Bearish

Looks like we may see some teeth in financial reform. Long term Bullish but short term = Bearish

An investment agency downgraded Greek debt in the PM yesterday, but the Euro held onto a significant move higher. In past, this would have sent the Euro tumbling. Sometimes there is a delayed reaction, but for now & for stocks = BULLISH

The Baltic Dry Index BDI has dropped well over 20% of its value in the last month+. Since the BDI measures shipping rates this fall is NOT good for world trade, economics. For stocks = Bearish

Futures up this AM = Bullish

Significant Indexes

• McClellan Oscillator rose to +50.26 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. Considering the volatility of the MO this is about as close as you can come without being overbought. = moderately bearish
• US Dollar –  The dollar fell a significant -0.77% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. The dollar was @ -1.4% lower in the AM and rose throughout the afternoon.

Reading the Tea Leaves -

A lot of reasons to be bearish this AM. But almost all of Wall Street’s eyes are focused on what’s happening to the EURO. FXE is the ETF that tracks the Euro and it was up +1.09% yesterday despite a downgrade of European debt. There’s a lot of reasons – see red bearish signals above, but if the EURO is going to continue to go up so will stocks.

FXE is the ETF to watch along with Spain’s (EWP underperformed yesterday)

Another charge at the resistance levels for stocks seems likely. Remember, each failed charge weakens the attacking force.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekend.

With the DOW up 113 points at it high yesterday – Interday the MO probably reached the 60 or overbought territory. This over bought position probably hurt the bulls yesterday. = Bearish

Traders - YOUR stock List from 2/6 & from 9/6 a list of stocks that were outperforming and “worth a trade.”

• VCI – broke out to new high
• SNDK – broke out to new high
• SAM – broke out to new high
• BIDU – @4-6% rally
• ESRX (not on list but position Investors411 held) – broke out to new high

No one ever went broke taking profits. My best read of the tea leaves is to sell 1/2 into today’s rally (let the rest ride and hope it turns into long term gains)

Of course the ultra long ETF’s often mentioned (UWM, THY) have have done as well in the mini rally of the last three trading sessions.

Dumping 1/2 of UUP for small loss.

The bottom line is will the EURO continue to improve?

From Yesterday – Change in outlook – This is tentative . Upgrading to NEUTRAL. Technically, this looks justified, but frankly, fundamentally I sure don’t see the light at the end of the tunnel.” – It was premature. Major indexes bounced off their 200 day moving averages and retreated in heavier volume. Not the technical breakout we were hoping for. Let’s wait till the resistance level actually falls to change the outlook. Maybe today Therefore, a return to CAUTIOUSLY BEARISH.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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Regulating the Casino’s

This is the week some sort of financial regulation begins to emerge from congress. Baseline Senerio has the best stuff on this here and here and here

It’s truly unfortunate that Obama is NOT leading the charge to regulate shadow banks or even substantively backing Volker.

Casino Capitalism

It’s critically  important if you are an investor or trader in stocks  to recognize stock prices are being dominated by massive institutions and hedge funds with ultra huge high speed computers.

Mutual funds and your average investors and you day/swing traders etc. make up only @20% of the market. Many average investors have realized that opaque US casino capitalism and stock markets are rigged. They’re staying out of investing.

They trade 24/7 worldwide in currency/bond and stock and are in and out of a company like SNDK often in a matter of minutes.

The best we can do is to follow the footprints (perhaps a better analogy would be is to follow the elephant droppings) of “masters of the stock universe.”

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

Another low volume rally occurred in the last 45 minutes of trading.  The key technical that’s showing the most correlation with the US stock market – The Dollar – dropped a bit less than -0.50% (see below) in this 45 minute period and this sent stocks on late day rally.

Some auction of Spanish bonds went well. Spain is the S in PIIGS + H (Hungary) – those countries we know are NOT doing well across the pond. Spain EWP (US ETF) gapped higher at the open for the second day in a row, fell, then consolidated mid – day and rallied into the close. At the end of the day Spain’s ETF shot back led all world markets higher up +3.45%

Spain, because of its size and seriousness of its debt is key factor in Europe’s debt problem. Good news here = Bullish

A double gap higher off a low is certainly bullish (even in long term), but a triple gap higher often means a stock is over extended and will correct. = Bullish

UUP is the ETF that tracks the dollar. EWP (Spain’s ETF) is now the cutting edge to focus on. It goes up, the dollar goes down and stocks rally. France and Germany are more important than Spain (bigger stronger economies). But if Spain tanks its big enough to take a lot of  Europe then the world down with it.

Right now we’re still in the discovery stage,  of which countries in Europe are in what size trouble. This extends from Russian satellite countries on the East to Spain in the West.= Bearish

The most important thing to recognize are stock prices are being dominated by massive institutions and hedge funds with ultra huge high speed computers. Mutual funds and your average investors and you day/swing traders etc. make up only @20% of the market. Many average investors have realized that opaque US casino capitalism and stock markets are rigged.

Fearless Forecast for Week – Rally Ho on European Sovereign Bonds & Spain at the end of the week. Should continue this week. Another successful sovereign debt auction in Europe could really move the dollar lower and US equities higher.  I haven’t the knowlege to to understand how deep the European debt problem is. Like the USA it’s hidden in the shadows of unregulated derivatives.

#2 reason for arally is regulatory mandates on shadow banks and casino capitalism seems to be loosing.

The low volume gives the Huge institutions and hedge funds even greater advantage in manipulating markets.

The area on the benchmark S&P 500 around 1105 to 1110 is the next resistance level. SPX at 1091.

Here’s the problem – The MO is starting to reach overbought territory (see below) and this could limit stocks up side (see below) The last time the SPX got up above 60 (high of 75) the SPX was at 1220. We could be at 60/75 well before the SPX reaches 1120 (one hundred points lower)

Nevertheless, those algorithms created by the super computers are spitting out buy signals.

Significant Indexes

• McClellan Oscillator rose to +43.30 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. We moving close to overbought, but still basically = NEUTRAL
• US Dollar –  The dollar rose Friday +0.33% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. The dollar was @ +0.50% higher and fell into the close.

Reading the Tea Leaves -

Currency markets>Bond Markets>Stock markets. Stock investors are the tail and the tail does not wag the dog. The action is in Europe. If European debt is bought at a reasonable rate, US stocks will improve. Right now EWP (Spain) is the ETF to watch. Of course, there will be more European shoes to drop. But none did over the weekend.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekend.

All the stocks on YOUR stock list as well as ETF’s like FXI (China) EWZ (Brazil) and those that mirror the US indexes (long or better) should do well until ovebough conditions exist.

Expect some sort of dip when the MO gets into the 60/75 range. Perhaps tomorrow.

CAUTION – I don’t have the inside knowledge to predict what will happen in Europe. What I can tell you there is a strong bounce off the bottom in Spain that’s leading the charge. Those huge institutions with their super computers have recognized this and are buying dips in US stocks.  The real question is who is buying European debt?

Best guess – Institutions/govenments that can hide their books and would get hurt by a collapsing Euro.

Change in outlook – This is tentative . Upgrading to NEUTRAL. Technically, this looks justified, but framnkly, fundamentally I sure don’t see the light at the end of the tunnel.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Disaster Capitalism

The major news this AM is that the BP spill is twice as large as originally thought.

Giant financial/economic and in this case also environmental catastrophes are opportunities for great change. The bottom line in the BP disaster is just like the bottom line in the 2008 financial debacle. In great disaster comes great opportunity.

• For the 2008 over leveraged casino capitalism disaster – We can change to a system where taxpayers no longer subsidize the risk and the giant shadow banks no longer have privatized gains
• For the 2010 (another free market/casino capitalism) BP catastrophe we can make a significant change toward alternative fuels.

Disaster Capitalism is referenced in Naomi Klein’s The Shock Doctrine One example she uses is how Cheney/Bush used the 911 disaster to invade oil rich Iraq. This war had nothing to do with 911, but shows how far you can move American opinion when a disaster happens.

Quite simply Wall Street is taking over our democracy. We have members of congress who are willing to challenge this. (example the 3 Republicans & 30 Democrats who voted in Senate to break up the shadow banks), but we lack a Teddy Roosevelt in the White House who is willing to lead the charge.

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

Yesterday stocks stopped dancing on the edge of the cliff. We had one of those, now typical, decreased volume mega rallies. = Bullish

Volume has lost its significance, and The Dollar has taken over as the single most important factor moving stocks. (see below) The dollar moved significantly lower and crossed a major resistance level. The trend higher has not changed, but a technical analyst will tell you its 5 day breakout to a new high has failed. (see chart) and the dollar has moved back into its consolidation pattern.

Fundamentally – Some auctions of treasury bonds in the European (PIIGS) countries turned out OK. Translation, like the USA the interest rates were not too high = there were buyers. A couple reasonable  auctions in the PIIGS’s  bond market [bond market is bigger than stocks, but not as big as currency] does not end the crisis, but it is a positive sign. = Bullish

Yep, as a couple of you mentioned in comments section there was short covering and some other decent fundamentals, but none significant enough to cause a huge rally

BP did recover @ 2/3 of yesterday’s loss. This indicates that traders have changed their mind about the solvency of BP. The roller coaster here is still in play. Good news reported is that BP is considering not giving part of its $10 billion dollar dividend. = Bullish

Futures are Flat = Moderately Bullish

Holding stocks over weekend = Moderately Bearish

Significant Indexes

• McClellan Oscillator soared to +20.49 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. We are a smidge oversold, but basically = NEUTRAL
• US Dollar –  The dollar fell a Significant -0.91% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Dollar falling significantly = Stocks rise significantly= Bullish

Reading the Tea Leaves -  The more time an Index, Sector, or Stock keeps testing a support/resistance level the stronger it gets.  Each test pulls back a slingshot. We had 4 tests of the 1040 level on the benchmark SPX , so we pulled back that slingshot 4 times. What happens to arm the slingshot is traders buy more puts and calls each time we test a support/resistance. This is why we saw such a HUGE gain aided by the afterburners of the dollar’s fall.

Obviously, if you’ve been reading Investors411, today is the confirmation day of yesterday’s rally - Therefore important.

Longer term – right now we have a short term counter rally in a bearish mid term trend. The dollar is key to market direction and those moderately successful treasury bond auctions in Europe have stopped panic (for now). There are other debt shoes to drop, but its impossible to call where and when.

The chart to follow is the UUP [ETF for the dollar]

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekend.

Still holding very minor positions in VCI, ESRX & now UUP.  Was stopped out of SDS at 34.53 for 0% gain. 1/2 this position made +8% & 1/2 made +0%

Traders - High frequency traders and hedge funds dominate this market. Be careful.

China (its GDP, import, & export numbers) is the country to watch. BIDU is their AAPL [Both on YOUR Stock List] BIDU exploded +7.76% higher yesterday while AAPL was in line with major indexes – up +3.01%. BIDU, on a dip, seems like a decent but risky play.

The Beta play is back for now. If you do not understand “beta play” look it up in Investopedia & you should NOT be trading short term till you understand more. At the point you realize how much more everyone else knows than you/me, then think about short term trades.

Investors – We’ve had the first signs of the EURO stabilizing – Good treasury bond auctions abroad. The FXI EWZ(China & Brazil ETF’s) are still the best plays.  You could nibble a little on dip. However MO is +20 and it would be better to nibble at -20 and much better at -60 and best below -60.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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Center For Public Integrity

The two top groups of journalists out there doing investigative journalism in the public interest are the Center for Public Integrity. and

OpenSecrets.org

Both groups aren’t afraid to go after the polls and power brokers/lobbyists whoever they are. Stories like-

• 97% of the violations happened at 2 BP refineries
• The companies with the most lobbyists have turned this into @ 15% greater profit in each of the first two years
• Top ten lobbyist firms take financial reform to the Bank

The main focus of YOUR comments over the last few days has been on BP. These two sources above will help. The Huffington Post today echos what YOU said yesterday British Petroleum’s is Worth More Dead than Alive. Yesterday’s -15% drop in BP stock price, if continued, means that YOU – the Tax payer could end up paying for this disaster because BP may soon become bankrupt.

Rolling Stone, sorry Obama fans, front page story is The Spill,the Scandal & the President The Spill is clearly BP’s fault, and Cheney/Bush put the lobbyist and former business executives in place in far more than the energy industry. But, Obama has failed to clean house. Not the change we can believe in

Big Political Shift?

The lead NYT story today focuses on what Investors411 mentioned yesterday – California’s overwhelming passage of Prop 14 -

“traditional party primaries will be replaced in 2011 with wide-open elections. The top two vote-getters — whatever their party, or if they have no party at all — will face off in the general election.”

There are positives and negatives in this legislation. But overall it seems to give more power to moderate voters or have candidates appeal to a broader base in order to win. There are lots of variables, but its certainly a change.

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

Stocks are dancing on the cliff’s edge. Last few Investors411 have focused on how close the major indexes, especially the benchmark S&P 500 are from breaking their last major support level. The S&P (SPX) yesterday closed at 1055 and that edge is at @ 1040.

Major indexes are down @-13 % from their highs. Two different talking heads on the financial channels have mentioned -15% down is a significant figure. Because if its reached over 80% of the time it means -20% or an official bear market will follow.

When you combine this with the fact that we are close to this years low/support level its like dancing on the edge of the cliff.

Good news is stocks fell in decreased, below average volume = Bullish

Bad news volume increased as stocks fell & we ended the days near the low= Bearish

Bernanke spoke to the markets and created a bright picture in the AM. He emphasized “Don’t Cut Spending.” and our recovery while slowly progressing was still “fragile.”

Besides the dollars decline from highs what Yankee Bob brought up – BP - was behind the late day selling. Of course its impossible to exactly know since perhaps 80% of the trading is done by the huge sophisticated computers of mega institutions and their proprietary algorithms.

Futures are up dramatically this AM = Bullish

Significant Indexes

• McClellan Oscillator rose a bit yesterday to -21.25 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. We are a smidge overbought, but basically = NEUTRAL
• US Dollar –  The dollar fell about the same amount for second day in a row -0.35% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. The dollar had fallen @ 1.00% but rallied in mid afternoon, sending stocks lower. NB – The currency markets dwarf the stock markets in size.

Reading the Tea Leaves – The dollar will probably dominate stocks till earning season. That’s along time for a lot to go wrong or other shoes to drop in Europe. If you want to get really depressed here’s The Black Swan author Nassim Taleb on Debt, Spreading Like a Cancer

Hopefully you don’t share his gloom and doom, I’m more optimistic. But he makes some relevant points.

Traders – Rally day that gets sold into because few want to hold longs over weekend. Watch for news out of Europe.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekend.

Investors -It’s simply NOT a time to be in stocks. The long Term Outlook is negative – CAUTIOUSLY BEARISH. Why invest when it looks like stock will be lower over the next 6 months.  The single largest positive we have is stocks become so oversold they stage a counter rally and over the period of perhaps a week to a month you can make profits going long.

The second way to score (make money) is to use the ETF’s that are short the market like SDS (2X short S&P 500), UUP – that is an investment in a rising dollar and/or GLD. The strategy remains the same – buy the dip.

One reason to invest so that you make $ if the markets fall is a hedge. Your income may suffer, so at least on the other end you’ll make money.

Investors411 opened a 2% position in UUP (ETF tracks the dollar)at @25.60 (Have to double check this figure) Will buy more on dips.

Still holding very minor positions in VCI, ESRX & SDS

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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China

For well over a decade the big government, tightly managed, Chinese capitalist system has kicked ass.

Their GDP in past quarter was above 10% and its projected to stay near that lofty range.  It has obviously outperformed the casino/free market capitalism of the USA which has brought us a tech bubble and a financial/housing bubble. Both led to two major worldwide meltdowns. It has also outperformed the more socialist models in Europe, that adopted US shadow banking for their own.

China’s growing because money is flowing into a growing middle class while that same middle class is shrinking in  the USA.  In fact every democratic and capitalist economy from India to Brazil that is outperforming ours is growing their middle class. Perhaps China can manage to slowly cool down. Perhaps not. If the Chinese bubble bursts, so will economies around the world.

The problem here is this one party state that does not foster Democracy.

Elections

Primary Day in a dozen states across USA. Some results

• Most under reported is Prop 14 passed in California – “will give every voter the same ballot in primary elections for most state and federal races, except the presidential contest. The two candidates with the most votes would advance to the general election, regardless of party affiliation.” - Interesting.
• Blanche Lincoln won in AK. There was a progressive challenge that fell short. I love Lincoln’s derivative bill and hope it passes congress.
• Harry Reid got who he wanted to win in NV – The Tea Party candidate that wants to store nuclear waste in Nevada. He had little chance against her opponent in polls.
• For more see Huffington Post

Robert Kuttner

Scorecard on Financial Reform

This week/today we get to see what financial reform will look like when it is voted on. Many of what was necessary will be stripped. The Banking Showdown by Robert Kuttner is an excellent source on this.

Your Comments

Some Great threads going in comments section. See comments on right side of blog

• Paul R educational insight and others on stocks. – continues
• Jim J., John S. & Popeye on Israel – Looks like they settled on an International group should look into incident. Perhaps so, but Israel will never agree.
• Yankee Bob and others on BP – Got caught in a BP on line nightmare

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

US markets looked over the cliff, decided not to jump and backed away in increased, above average volume = Bullish

US Markets rallied into the close = Bullish

From Yesterday – “There is two interday lows that were lower this year – the lowest at 1040.78 (see chart) This is the line in the sand major support level for most technicians. Breaking this could open the DANGER WILL ROBINSON DANGER DANGER Floodgates. For right now it’s holding = Bullish”

We went down to the line in the sand for the second time since it was established as the yearly low in February. It held. Technicians call this a triple bottom and get excited. Fundamentally this held because the dollar fell. That’s what to focus on. But the fact that it held = Bullish

Financials was one sector that led this rally (+2.09) Weak financial reform likely outcome in congress. Materials was the other sector (+2.27) = Bullish

Significant Indexes

• McClellan Oscillator rose yesterday to -28.47 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. We are a bit overbought, but basically = NEUTRAL
• US Dollar –  The dollar fell -0.34% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Massive breakout to new high is bullish for dollar and for bearish for US stocks. That big breakout Friday was confirmed by Monday’s +0.25% gain. The dollar fell yesterday so stocks rallied.

Reading the Tea Leaves . From yesterday-”Expect central banks to intervene and BUY the Euro to stop the growing panic….Would expect some sort of relief rally today after two days of significant price declines and strong support level in front of us. But watch out later in week.”

Strong volume behind yesterday’s rally  and a -28.47 on the MO (we are a bit oversold) indicates a rally is getting started and has some room to run.

Bottom Line – The Dollar Rules. This rally will hold as long as whichever (probably a combination of Swiss, German US, French, Chinese? etc.) keeps buying/propping up the Euro.  Short term trend = Bullish

However the long term trend is still dollar up and Euro down – For stocks = Bearish

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekend.

Traders – Conventional wisdom says that stocks that held up best while others got toasted are the ones to invest in if markets rally – be it for a day, two a week. But sometimes those high beta stocks from YOUR Stock List that are down the most take a big initial first step. Those from YOUR Stock List still above their 50 day moving average and turned with the markets yesterday may be worth a trade today.

• VCI
• SNDK
• SAM
• BIDU

I’m perhaps too emotionally involved, but IMAX looks good and their seems to be a good lineup or 3D movies this summer.

Financials – No real reform = Bullish

• XLF – Investors could nibble here.
• UYG – (2X Financials)
• FAS -(3X Financials)

Still holding VIC, ESRX & SDS (may take profits in SDS) – Today considering positions in FAS (short term) & UUP (longer term) The later mirrors the dollar and also may be good for Investors to nibble

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

1967 TV Show Lost In Space-

Danger Will Robinson Danger Danger

It’s time to take out the Old Lost In Space TV show robot with all its bells and whistles and  have him flap his arms and announce Danger Will Robinson Danger Danger.  We’ve reached a critical technical support level of the US stock market (see stocks below) and if that level falls you could see growing panic.

The fundamental behind all of this is the revaluation of European currency down and the US currency higher. This reflects the worsening shape of Europe’s economy. Eventually a lower Euro will mean their goods will cost less to export. This will help their recovery. Relatively it means a rising dollar. Therefore, our goods will cost more to export. This will hurt American companies that export and cut profits.

It looks like the Central Banks across the world will step in to soften the fall. But right now a fall seem very likely. Lots more below under Stocks

Your Comments

Some Great threads going in comments section. See comments on right side of blog

• Paul R and others on stocks.
• Jim J., John S. & Popeye on Israel
• Yankee Bob and others on BP

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

The Bears Growled Again Monday. Sorry had a hard time reading volume charts (see right side of blog) and click on each Financial Chart in light blue on right side of blog.

Volume has NOT been as relevant as it has been historically as a confirmation factor. This makes the day after a major move more significant. Another decline (about 50% as big as Friday’s) is bad news for bulls. You can feel the fear investors have. = BEARISH.

The benchmark S&P 500 reached 1049.86 – a closing low for the year = Bearish

There is two interday lows that were lower this year – the lowest at 1040.78 (see chart) This is the line in the sand major support level for most technicians. Breaking this could open the DANGER WILL ROBINSON DANGER DANGER Floodgates. For right now it’s holding = Bullish

Approaching support with a lot of downside momentum (last two days), a rising dollar, and not yet over sold MO (see below) gives the bears a big battering ram. = Bearish

Significant Indexes

• McClellan Oscillator fell dramatically Friday to -47.68 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. Momentum down/Bearish, and approaching oversold. Remember in the past month+ twice the MO has fallen to over -120 So the MO can go much lower than -60 = NEUTRAL
• US Dollar –  The dollar rose +0.25% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Massive breakout to new high is bullish for dollar and for bearish for US stocks. That big breakout Friday was confirmed by yesterday +0.25% gain = Bearish

Reading the Tea Leaves . Expect central banks to intervene and BUY the Euro to stop the growing panic. They might get overwhelmed by fearful investors today. Eventually it will fall. The fundamentals in Europe are bad (See Investors411 over last few weeks)

Would expect some sort of relif rally today after two days of significant price declines and strong support level in front of us. But watch out later in week.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekend.

From Yesterday – “ SDS (2x Short S&P 500) Will sell 1/2 for hopefully 5% profit.”  - Sold 1/2 SDS (3% of portfolio) at 37.32 for +8% gain. Letting the rest ride for now.

From yesterday – Small remaining 1% positions in VCI & ESRX - Also considering selling into rally – Still Have VCI and ESRX will probably sellone or both into any rally this AM

The only position Investors411 has is a 3% in SDS (ultra short S&P 500)

Others we should be in include more ETF’s that short/ultra short major indexes, GLD & UUP (mirror’s dollar) Wating  for dips and MO to be higher to buy. These are all contrarian plays.

From Yesterday – Invetors411 main strategy remains wait for the McClellen Oscillator to fall below - 60 before going long.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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Financial Reform

From high Frequency trading to opaque credit derivatives our financial system is broken. If we go forward with this over leveraged opaque system it would be like never fixing BP’s gusher in the Gulf. We have the Tea Party members who want virtually no government oversight to the Obama administration who keeps saying, “go softly, go softly.”

Dallas Fed Chair Richard Fisher is another whose is standing for reform.

Turkey/Israel/Gaza = Crisis

Turkey, has called for Israel to join all kinds of international inquiries into what happened. Ranging from a joint US/Israel/Turkey group to one set up by the UN. The Turkish foreign minister said, unless they accept “it shows, they have something to hide.”

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

The Bears Growled Friday. Major meltdown Friday in above average increased volume. (NASDQ volume less of an increase) = Bearish

Fundamentals behind meltdown-

• Less than expected in over hyped (by Obama administration) jobs report
• Hungary announces economic troubles
• The Big News is France“

Troubles in Europe again causing major currency shift – Euro falls and dollar to rises. = Bearish

Market Leader -AAPL - still haing in at 258 = Bullish

Technically – The area around 1040 on SPX (S&P 500) is the line in the sand. SPX now at 1065 – Beyond 1040 the Limbo Line breaks down.

Fearless Forecast Last Week – “Down Week“ Unhappily right

Fearless Forecast This Week - Down Week – See Tea Leaves section below – Basically investors fearful of more problems in Europe will have traders selling into rallies.  Partial success with Gulf spill, Central Banks propping up Euro, Government officials saying things aren’t so bad in Europe could give us an up week. But, traders will probably sell into rallies. Eventually, the Euro, China’s problems & casino capitalism will take its toll.

Significant Indexes

• McClellan Oscillator fell dramatically Friday to -30.48 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. Momentum down/Bearish, but in not yet oversold = NEUTRAL
• US Dollar –  The dollar rose a massive +1.20% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Massive breakout to new high is bullish for dollar and for stocks = Bearish

Reading the Tea Leaves All those former communist countries of Eastern Europe who bought into the American capitalist “free market” over leveraged, shadow system starting with Hungary are in economic trouble. France has problems and together the Western and Eastern countries of Europe have a bigger GDP than the USA. More shoes will drop before this gets better.

Its no longer a question of if but when will these shoes drop. This week, next week, next month.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekend.

Bought SDS (2x Short S&P 500) at 34.52 Friday. Will sell 1/2 for hopefully 5% profit. Have stop/loss at 34.52. Its contradictory, but willing to buy more in any large stock rally. (S&P rallies, this stock goes down)

Small remaining 1% positions in VCI & ESRX – Also considering selling into rally

Invetors411 main strategy remains wait for the McClellen Oscillator to fall below – 60 before going long.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Senator Ted Kaufman -” The Most Important Person You’ve Never Heard Of.” - ABC

Investors411 readers have heard this name many times.

Too Big To Fail

Moody’s, has come out with a report that Congress has NOT solved the Too Big To Fail Shadow Bank Problem. A team led by Moody’s (one of 3 major credit rating agencies in USA) big wig Robert Young concludes:

“[A] key issue that challenges the feasibility of the proposed legislation is that it would not fully eliminate the issue of interconnectedness, nor is it likely that resolution authority could fully eliminate the systemic implications of allowing a large and/or highly interconnected firm to default, especially with respect to large international groups, and it certainly would not eliminate the risk of contagion,”

Shahien Nasiripor writing in the Huffington Post point out some obvious and alarming statistics. The 4 major shadow banks alone are growing and now control $7.7+ trillion dollars of money. [$7,700,000,000,000] Relativity = Lehman Brothers who collapsed in 2008 controlled $400+ billion. Therefore, each of these major  banks is @ 5+ times large than Lehman’s.

Now think, of the people/ businesses who have their savings in each of these major over leveraged shadow banks. If one goes down, like Lehman panic will certainly spread to others. Bada Bing, Bada Bang, Bada BOOM!

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

Mantra – Volume has not worked as confirmation factor for many many moons. = Neutral

Lack of volume shows hedge funds and giant institutions with their high speed computers are the dominating the US stock markets. Most average investors have long since got out.

As predicted, (it was no surprise) yesterday markets held onto the significant gains of the day before. = Bullish

A major French bank got toasted this AM because of  derivatives. Emphasis on the word French = Bearish

All eyes on monthly jobs report - Its safe to say this number is massaged or manipulated to a degree by whatever administration is in power. Comparing the USA’s unemployment rate with other countries is like comparing apples and oranges because of the different ways each country compute/massages its unemployment number.

The Employment Report- 8:30 EST  - +431,000 jobs, Employment number down to -9.7%, Private sector jobs only +20,000. Most jobs created by census. = WEAK Report – Worse than expected.

Significant Indexes

• McClellan Oscillator rose to +9.43 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. -  This is first time the MO has turned green (entered positive territory) in over a month. Momentum is up, but bottom line – this is NEUTRAL territory -   How the MO works.
• US Dollar –  The dollar rose a significant +0.52% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Currency markets are now being directly manipulated by out Fed and other central banks. This manipulation is to keep the Euro from falling. Dollar  at $87.25 Chart shows at least 6 attempted breakouts above @87.5 have failed in last 2  1/2 weeks. = Bullish.

Reading the Tea Leaves - – Stocks are focused on the jobs report.  Since stocks have rallied into the into todays jobs report, it would be logical for the Central Banks to allow the dollar to rise to a new high with a decent jobs report. Momentum is up for the MO and this currently translate to a short term positive for stocks.

Since Obama administration (leaked?) and Wall Street have built into the recent rally a much better than expected jobs report expect the following.

• Worse than expected numbers – Stocks take big initial hit, but US employment is not really a major factor in shorter term US stock prices – Hedge funds and giant institutions are far more worries about the monsters mentioned yesterday.
• Better than expected numbers – Would have to be blowout numbers. Really good numbers already built into stock prices. A blowout number will send the dollar and stocks soaring. Sometime during the day major players will realize that a soaring dollar will hurt stocks (even central bank intervention can’t stop a massive run) and this will temper gains.
• Obviously, better than expected numbers is good for the long term economic well being of the USA.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

Have NOT had a chance to update this/last weeks trade. You can find results in individual post over last two weeks

Consider ETF’s that short the markets.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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Global Economic Monsters

• Over Leveraged Shadow Banks – Financial reform has fizzled in congress. (see a zillion past Investors411 for more) Short term – a shot in the arm for shadow institutions and their stocks. Long term - FDIC guarantees deposits of YOUR $ and they can still take any risk they want.  Bubble building casino capitalism, where gains are privatized and YOU socialize the risk.
• Debt Crisis – Europe Debt on the hot seat right now. Aussie’s Clarke and Dawe do a great job explaining this and their drop dead funny. Now add to this all the derivatives (over leveraging) placed on debt. First a bailout. Now central banks around the world are pouring $ into the Euro to stabilize it and keep dollar low.
• China Slowing Growth – A country can’t keep its GDP growing at 10% forever. Google [China, Slowing, Growth] and you’ll find story after story worried about a Chinese housing bubble or manufacturing decline. China’s #1 ETF – FXI This ETF used to outperform the S&P 500 by a wide margin. Now it underperforms. Investors $ are speaking and there is some cause for concern.
• BP/RIG/HAL Oil Spill – Major damage to these stocks and more importantly the environment. We all know its only just begun and yesterday was the start of hurricane season. 27% of America’s oil & 15% of our natural gas comes from the Gulf.
• “Supreme Leader,” “Great Leader,” ” Dear Leader” AKA Kim Jong-il –  You’ll never see a flotilla of Palestinian or any other peace activist off the shore of North Korea. (A double standard) Most repressive country on the planet, always confrontational and has nukes. Just committed an act of war by sinking South Korean naval ship.
• Mid East - Where to start? Iran, Afghanistan, Iraq etc. Current Crisis between Israel/Turkey does far more than put the $3 billion in “free” trade between these two democracies at risk. Terrorist through out the region are now in a stronger position and embolden because of this confrontation. Everything in the MidEast is oil/energy related.

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

Significant Melt UP in light volume = Moderately Bullish

Obama and his administration seem to be dropping hints that Friday’s job numbers are going to be good. This was fundamental behind melt up. Buy the rumor & sell the news.

Volume did NOT confirm the price move. So what else is new. Volume, which is historically the #1 confirmation factor of a price move has NOT worked for many many moons. = Neutral

Massive amount of bad news – N. Korea, BP failed to plug oil, Israel/Turkey/Gaza, Euro debt crisis – yet we have a melt up. How markets react to news is our #2 (now #1) confirmation factor. Yesterday was a good price reaction despite bad news. The potential bad news is built into price right now = Bullish

MO has some positive momentum but in Neutral territory = NEUTRAL (NEUTRAL is all in CAPS because this right now is most important indicator.)

AAPL is the unofficial leader in this rally and the chart formed a T (see chart) yesterday in weak volume. Could be a top. Moderately Bearish

Expect Fed and other central banks to keep  propping up Euro.European markets at 6 week high.  = Bullish

Reading the tea Leaves – Historically, it difficult to see a follow through day after yesterday’s melt up in light volume. Baring an unforeseen incident – like Israeli’s killing more peace activists on ship heading to same area – it wouldn’t be a surprise to see a rally into the jobs number.

Significant Indexes

• McClellan Oscillator took a huge jump higher to -5.78 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is NEUTRAL territory.  How the MO works.
• US Dollar –  The dollar fell -0.02% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Currency markets are now being directly manipulated by out Fed and other central banks. This manipulation to keep the Euro from falling. Chart shows at least 6 attempted breakouts above @87.5 have failed in last 2  1/2 weeks. = Bullish.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

Have NOT had a chance to update this/last weeks trade.

EVVV was eliminated from YOUR stock list because company was bought – (Thanks to Paul R for info)

IMAX remaining shares sold near open at 17.02

Windows of opportunity to BUY and Sell -

The McClellen Oscillator (MO) is working well right now and +60 or above = Overbought = sell. -60 or below = Oversold = buy

This works best with the broad based ETF’s that mirror the major indexes or for those who can handle more risk ETF’s that do 2x or 3x what major indexes do like TYH that does 3X major tech stocks. Approaching or below -60 buy. The further the better.

Above +60 sell or go short with ETF’s that short major US indexes. Example SDS (2X short S&P 500)

One major reason I stated that there was a “decent trading” opportunity yesterday was the MO was at -50 or almost oversold. We had a low volume melt up.  One major reason the MO was not an investing opportunity was we were not below -60.

Mea Culpa = Hindsight is great = should have invested MORE when MO was between -60 & -130. If I had, I’d start to take a little profit right now

(Will continue analysis of MO later)

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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Gulf Oil Spill & the Financial Crisis

Bob Kuttner, often mentioned in Investors411, explains why the Gulf Oil Spill is almost exactly like the Financial Meltdown. [Bob is from my hometown and used to endorse my wife when she ran for school committee]

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

Significant Down day in mixed light volume = Moderately Bearish

Massive amount of bad news – N. Korea, BP failed to plug oil, Israel/Turkey/Gaza. Surprised markets did NOT drop more. = Bullish

MO getting close to Oversold = Bullish

Expect Fed and other central banks to prop up Euro again = Bullish

In the long run price fixing rarely works. This is what our Fed and other central banks are doing to the Euro. However, as long as investors are willing to buy government bonds at a low price the situation will hold. Best read of tea leaves – Don’t see any signs of impending breakdown. = Bullish

Significant Indexes

• McClellan Oscillator fell to -50.19 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is nearing OVERSOLD territory.  How the MO works.
• US Dollar –  The dollar rose +0.03% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Currency markets are now being directly manipulated by out Fed and other central banks. This manipulation to keep the Euro from falling = Bullish.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

Have NOT had a chance to update last weeks trade.

YOUR Stock List

Caution - This is mostly just technical analysis and lots of other factors enter into a decision to buy or sell.

Terminology

• 50 Day Moving Average of price- blue line on chart = 50DMA
• 200 Day Moving Average - red line on chart = 200DMA
• Ticker symbol for each stock is a link to a chart.
• Volume - Horizontal red (down days)and green (up days) line at bottom of chart show volume
• * Owned positions
• “Volume good” - translation – relative to major indexes individual stock is looking good – probably more upside volume on rally days than downside volume on toasting days.

Most of you are looking for longer term buys. Remember Stocks are in most cases riskier than most ETF’s. Our main strategy is to buy the dip of a stock that is trending higher.

Relativity – The last YOUR stock List was done on 5/18

• The Dow was above 10,600. Now the Dow this AM is just above 10,000 = almost -6% lower
• MO was at -68 then and -50 now = conditions were more oversold then than now, but still oversold.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

• AAPL . @+1% since 5/18. Last big cap tech stock left standing. Has held up pretty well. Caution – Chart shows its near strong resistance level. Formed double bottom = Bullish Should continue to outperform. Buy the Dip
• SHOO @-6 Chart shows lower highs and lower lows. Old favorite that has produced in past in bearish pattern – Gone.
• *ICON @-6% Another series of lower highs and lower lows – Gone
• DGIT @+0 Firm tend line higher. Higher highs and lows. Good volume. Dipped down @5% from high three days ago. Has had 10% dips in past. Buy the Dip
• *VCI. @-2% Has series of higher highs and lows. Good volume. Big fall -5+% in moderate/weak volume yesterday. Buy the Dip
• SNDK @+5% Broke out to new high and is falling back to breakout level in weak volume. Buy the Dip
• CTRP @-0% Stock has big swings and trouble getting past strong resistance at @42. But series of higher lows & decent volume make it a potential winner – Buy the dip
• *ESRX - @-2% Still outperforming markets, Volume good. Has strong resistance level at @105. Consolidating. Future Breakout candidate. Buy the dip
• *IMAX @-15% Investors411 has sold 3/4 of this position. Our +60% gains are melting away. Dangerous head and shoulders trading pattern forming. Volume not good. At critical juncture. Sell into rally.
• MSPD @-8% Lower lows and lower highs. Oversold right now but pattern broken.

Fresh Five – 5 new stocks

• OSTK (Overstock.com) Exploded higher in early April & May. Now consolidating. Dipped last 3 days in weak volume. Getting close to rising 50DMA. Buy the Dip
• JAS (Jo Ann Stores) Has had trouble (like ESRX) getting past resistance level above 47. Good volume. Dipped last 2 days after attempted breakout failed. In trading range between @40 &  @47 Outperforming.  Buy the Dip
• BIDU (Baidu INC – China’s Google) Outperforms. Broke out/soared  in May & has pulled back. Support at rising 50DMA. Buy the Dip
• SAM (Boston Beer Co.)Great Beer Co. going elliptical on breakout run higher. Wait for correction
• EVVV (ev3 Inc.) Had a HUGE +17% move yesterday in giant volume. Wait for correction (Last 2 both have lots of potential)

On the whole YOUR stock list outperformed major markets over the same period of time. Since generally the stocks chosen have a higher Beta (more volatile) you’d expect them to do worse.

Since Central Banks around the world are flooding the currency markets with money to stabilize the Euro its hard to see another major leg down in stocks right now. Remember, if Euro goes down, the dollar goes up and that hurts stocks.

BP/Transocean/Halliburton, N Korea, Euro Debt, Israel/Turkey/Gaza issues have all seemed to have been priced into the market. Overall, for long term investors still = CAUTIOUSLY BEARISH

Politically the Obama administration, as every administration before him, will bend over backwards to keep stocks moving higher into elections.

Traders – You’d like the McClellen Oscillator (MO) to be lower, but a short term  trading window is decent. NOT great.

.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING