900 Cities

The Occupy Wall Street has expanded to over 900 cities in the USA (CBS)

Boston was where the action was. Yesterday joined by students thousands marched and 100 including veterans were arrested for camping out last night. Frequent blogger Popeye was there for the march. Check out his remarks today in comment section of blog.

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Bernanke’s

Trickle Down Economics

The biggest stock market manipulators right now are the black box/HFT traders that have driven many investors out of stocks. These HFT’s don’t have a market bias, but look for certain conditions (Investors411 believes they use oversold/overbought as a major indicator) to make trades.

Our Central Bank – The Fed – and other similar national banks are perhaps THE major manipulators of stocks. By pushing for low interest rates and adding to the money supply they force additional money seeking a better than 0% return into speculative stocks. (& other methods)

Here’s how the trickle down is s supposed to work.

  • Stock markets rise
  • Top 5% of Americans own 90+ % of stocks (sorry figures are from my head and probably conservative)
  • They get richer and buy stuff – Top 10% of Americans make 50% of purchases. (top 5 to 10% own lots of stocks too)
  • The money is supposed to trickle down to bottom 90%

On the darker side - It doesn’t trickle down because many of the goods are made abroad. Jobs from profits also go abroad and foreign consumers are becoming more important that the bottom 90% of Americans.

On the brighter side - those of us who have limited amounts of money in stocks benefit from Bernake’s trickle down economics too.

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Stocks

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

Index Percentage Volume
Dow +2.97% down
NASDQ +3.50% down
S&P 500 +3.41% down
Russell 2000 +4.37%

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Market Analysis

Focus on TechnicalsFundamentals & HFT’s

  • Major Major rally is weak volume. Obvious HFT & programed Trading participation juicing the move.
  • Since Monday when Investors411 stated there was the potential for a RISK ON trade the Dow has moved +1000 points higher.
  • Mea Culpa – The vote in Slovakia on bailout is today not yesterday. – A market mover. Alcoa the first of the Dow stocks reports today.
  • TrendKicking the can down the road on Greece is mana from heaven for HFT’s who can use every news items to execute short squeezes, pump and dumps or catching institutional traders with losing long positions. An extremely strong correlation exists between European and US markets.
  • Long Term Stock Trend - Yesterday we broke a two + month long trend of major indexes trading below 50 Day Moving Averages. Today is the confirmation day of that move. Remember when we broke out of the trading range on the bearish side in the last 45 minutes of the next day stocks rallied and did NOT confirm the move lower. Confirmation would be Bullish

Investors411 – Forecasting Tools

  • The PCR closed at +1.21 (Roughly - above 1.25 is getting Bullish and below 0.80 is getting Bearish. 1.00 = same amount of puts and calls. Over last two years the highest for PCR is @1.50 and lowest @0.60 - anything approach these levels shows change likely For more information on PCR LINK) 1.21 is just above PCR’s 50 DMA= Neutral

The McClellan Oscillator (#1 forecasting tool)

  • (MO) exploded  to +51.57 (Rough estimates =-30 somewhat oversold, -60 oversold, -90 OMG oversold & +30 somewhat overbought, +60 overbought and +80 OMG overbought) = Neutral/Bearish

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Reading The Tea Leaves


Short Term Outlook

days, week+

  • MO clearly entering Bearish or reversal territory. No confirmation from PCR which is neutral.
  • Another major move (@250 Dow points) today would create a RISK ON trade. Those that can handle the risk should short the market or sell long positions. (see below under Traders)

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Paul’s Corner

HFT’s & Hamburgers

This past Saturday I had to pick up some parts for my tractor. On the way back I stopped at the local McDonalds for a quick lunch. I went to the drive thru and ordered a Quarter Pounder and a medium Dr Pepper.  I specifically mentioned several times “no cheese”. When the order taker repeated the order I asked if she cancelled the cheese. Yes, no cheese was her reply.

A short trip to the pickup window and I was on my way. I pulled around back and parked under a shade tree. A quick sip of the good ole Dr. Pepper and I was ready to dig into the Quarter Pounder. I unwrapped the burger, and much to my surprise, I found a thick gooey slice of yellow cheese dripping down the side of the bun.

What gives I grumble? How many times do I have to mention no cheese? Well rather than taking it back into the store I decided to hold my nose and try to down this horrid cheese burger. Each bite was horrible but it gave me time to think why it had cheese. The order taker listening to I tunes? The grill man who was trying to juggle a Saturday crowd? Or is it just an evil minimum wage girl at the pickup window who gave me someone else’s order?

Well after careful thought I figured it out, it was the HFT’s that ruined my Quarter Pounder. The same evil people from Wall Street that are making us lose money on every trade, have taken to middle America as vengeance on the great unwashed.

You think I’m kidding? HFT’s have made it unsafe to trade. Even the low volume stocks like NLY have massive HFT’s ripping us off every day. Aw come on, I’m not kidding. We blame the HFT’s for every move of the market these days. It’s not the news from Europe that turns the market on a dime, it’s not the fact the we made a bad buy, it’s not the fact we should have sold, it’s not Obama, it’s the HFT’s that have ruined wall street.

So do we stop trading—do we change restaurants— or do we pick the best stocks, buy at a good chart pattern, set stops, avoid greed, realize market action needs to be watched, and reject intimidation by the HFT’s?

Enough already I think I’m going out for breakfast and it’s not to McDonalds, oh before I go here is some GMCR business:

LINK

Now where are my car keys?

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Current Positions

Below – Investors411  hypothetical portfolio that should outperform the S&P 500

See POSITIONS Section of blog for more on YSL#5.(scroll to bottom)

Traders

After 1000 point Dow move higher no one ever went broke taking profits

MO went from +9.87 to +51.57 = a gain of @43 points which roughly corresponded to a NYSE gain of about 3.5%. Every time the MO has approached +80 since the spring of 2009  major indexes have  fallen at least 5% in the next couple weeks.

RISK ON trade - Any Major rally today (@+250 on Dow) would create a trade for those that can handle the risk – Sell long positions (Take some profits) or short stocks using leveraged ETF’s like SDS and TZA.

Unfortunately the PCR is in Neutral and therefore NOT confirming a reversal. So there is additional risk.

KUDOSTo everyone who had the guts to go long on last Monday’s (8 days ago) RISK ON trade. You scored big time. Remember as the MO moves higher into oversold territory nobody ever went broke taking some profits.

Investors

Our Hedge Investment Theory – Technology will do better than financial sector over time. Going both  long and short. Hopefully covers us in up or down market. Thinking about exiting 1/2 of this trade that seems to be going nowhere. Sold 1/2 near open SKF for 79.05 & QLD for 80.2o TOTAL @0% gain.

  • Short Financials – Investors411 will use ultra short SKF (opened at 78.91 – now at 74.58
  • Long technology - Investors411 will use ultra long QQQ (tech’s) QLD (opened at 81.13 – now at 82.74)
  • This hedge play is almost exactly flat.

GLD or DGP – Looking for a buy the dip in gold – Central Banks in Europe, US and Japan are all at of going to 0% interest rates and injecting monetary stimulus (US holding off on QE #3 for now) This is bullish for gold. After breakdown has consolidated and moving back up (see chart) .

Disclaimer I buy everything in the hypothetical Investors411 portfolio. If stock is mentioned and I own it you will know.

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Long Term Outlook

3 to 6+ months

Same old mantra -Reasoning behind May 20th & Sept 22 downgrades still stand.

Bearish - Add to this Europe’s problems, Japan’s disaster, China’s slowdown, a rising dollar (bad for globalized US companies), & our broken opaque financial system.  Best hope for a significant move higher is the Fed to act significantly – inject more liquidity or Europe to come to some clear final resolution instead of kicking the can down the road.

Bullish -Congress Dysfunctional” – Former Sec. of State Gates, Fed Chair Bernanke, Sec of Treasury Geithner LINKHorrible for economic solutions to problems, but good for major US companies/stocks because it allows them free rein.

From yesterday  - NB - If the benchmark S&P 500 closes above its 50 DMA today (& I think there is a good chance for it to happen) the Outlook will change to NEUTRAL We closed well above 50 DMATherefore change to NEUTRAL

NEUTRAL*

*Investors411 has 5 different long term valuations - BULLISH, CAUTIOUSLY BULLISH, NEUTRAL, CAUTIOUSLY BEARISH, and BEARISH.

* Everything written in BROWN is a repeat from a previous day(s)

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

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