Investors 411 Blog

by Barr Jozwicki
July 15, 2012

Recession/Deficit Solutions

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , , , , ,

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The Greatest Economists of the 20th Century

Agreed that you Stimulate Your way Out of a

Recession

.

.


Solutions to The Deficit

Stimulus or Austerity

(Part 1)

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The  Outstanding Success of

The Obama Stimulus

.

.

Why Stimulus Works

&

Austerity Doesn’t

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The Obama Stimulus cost $787 billion.

Our national debt is @ $15 trillion.

A 5.2% one time addition to our debt.

.

.

Under Obama & his Stimulus

Job growth went from -800,000 to +300,000

GDP went from -8.9% to +3.9%. = +12.8%

.

Millions of jobs

created millions of taxpayers

& the GDP expanded.

Taxes paid by those with jobs

REDUCE the deficit

year after year after year…

.

Everything was working until

*The Stimulus ran out

*The Austerity/Banksta Republicans

won the House of Representatives

&

*Obama, himself, put more focus on

austerity instead of stimulus

.

.

Republican blocked virtually every

stimulus/jobs growth plan.

&

Had to be dragged kicking and screaming

for even a payroll tax cut

.

********************

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Let’s see what happens to

the deficit

when Banksta/austerity

gain even more control.

.

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Examples – Austerity as a Solution

The European countries in economic trouble.

Portugal, Ireland, Italy, Greece, & Spain

.’

.

Ireland’s “free market” economy was

the goal of every Banksta in America.

The Baking Industry had “captured government”

Regulators were no where to be found.

Then Something Hit the Fan

.

.

Ireland was the first country to impose

The Austerity Solution

.

The Deficit

Exploded Higher

.

Ireland Government Debt To GDP

.

Ireland’s unemployment rate exploded

from 4.6% in 2008 to 14.3% today

..

IRELAND with Austerity

A 311% INCREASE in Unemployment

A 433% INCREASE in Debt to GDP

.

In Hard Economic Times

Austerity = More Debt

..

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More Examples

The Other 4 Troubled European Countries

who have adopted the austerity solution.

All have

Debt to GDP ratios that are still exploding higher

All  have unemployment still exploding higher

For data on these countries see this LINK

.

Next Blog – Common Sense works, Regulated Banking works, When Austerity works, Those plutocrats that don’t give a damn, but say they do – More Solutions.

FINIS


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June 8, 2012

1% get 93%

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , ,
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Income Inequality
.
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“2009-2010, the top 1%
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of US income earners captured
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93% of the income growth”
.

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.
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“America has become a country
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not “with justice for all,”
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but rather with favoritism for the rich
,
and justice for those who can afford it
,
– so evident in the foreclosure crisis,
,
in which the big banks believed
.
that they were too big not only to fail,
.
but also to be held accountable.”
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Nobel Prize Winner
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.
.
******************
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Yankee Bob’s
.

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The Rifleman, the Virginian, Bonanza, The Big Valley or a number of other Westerns, where a small town where a small town newspaper editor, by himself would take on and defeat Big Vested interests…
.
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********************
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.
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Please, Just do what

Ronald Reagan did & his top

economist Milton Friedman

recommends – Stimulate
.
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LINK to Krugman editorial
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(See Monday’s 411 for Friedman recommendation)
.
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The Money Quote
.
.
“As many economists have pointed out,
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America is currently suffering from
.
a classic case of
.
debt deflation:
all across the economy people are
.
trying to pay down debt by
.
slashing spending,
.
but, in so doing,
.
they are causing a depression
.
that makes their debt problems
.
even worse.”
.
.
******************
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China’s Growth
.
.

.
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6 Charts all showing

a slowdown

in China’s Growth

(See Link above for more)

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Across the world

when Economic times get tough

You do NOT impose

AUSTERITY

You STIMULATE the Economy
.
Exception -

USA’s Right wing austerity dogma
.

  • Major news from China is surprise [STIMULUS] interest rate cut. Short term juice for stocks but Long term = Chinese economic slowdownBearish
  • Repeat – “411 currently uses the yield of the 10 year Spanish bond as a leading indicator of market direction – Our canary in a Coal mine. - Bond yield up= stocks down”

Past quote on

Long Term Outlook

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“No changes in LTO considered

till Spanish bonds at least close

below at 6.25%.

.

  • Let’s have  at least a 3 to 5 days of yields remaining below 6.25% before we upgrade to NEUTRAL.
  • The ugly Fundamental reality in Europe can overwhelm Central Bank intervention/manipulation.

.

Longer Term Outlook

3 months+

.

CAUTIOUSLY BEARISH/

NEUTRAL

.

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK & POTENTIAL LOSS OF PRINCIPLE

CHECK ALL DATA, I MAKE MORE THAN GRAMMAR  ERRORS.

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June 4, 2012

Money Flows & Grows

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , , , , ,

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Money Grows

When You know

How it Flows

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The European Union

.

Andrea Merkel/Germany

.

.

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Andrea Merle – NEIN

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Andrea Merkel has said NEIN to any

compromises

that would allow the ECB

(European Central Bank)

to stimulate and rescue the EU, like our Fed.

See - Bernanke Hero/Villain

.

George Soros

[Left Wing]

on Euro crisis

&

3 Months to save the EURO

.

.

.

“You can NOT

reduce the debt burden

by shrinking the economy,

only by growing your way out of it”

.

Nobel Prize Winner

Milton Friedman

[Right Wing]

LINK

.

.

“buy long-term

government securities [today's QE]

and they can keep buying them

and providing high-powered money

until the high powered money starts

getting the economy

in an expansion.”

.

Even this President

Ronald Reagan

.

.

when confronted with a

minor Recession chose stimulus

He added more government jobs

.

.

Why doesn’t Austerity work when

a country/World is in recession

.

If you are having a tough time, you tighten your belt and spend less.

But what happens to a country where everyone tightens their belt?

Everyone spends less and the GDP goes down because no one is buying. Money stops flowing. Unemployment explodes higher and fewer are able to pay taxes.

.

No matter how angry you are at

those in debt or the banksters,

that anger just clouds your mind

.

The AUSTERITY Solution

to recover from a Recession

Does NOT work.

.

This is happening

throughout Europe

as the bankers/banksters/Merkel

who own the debt & derivatives

on the debt demand

only austerity.

.

********************

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Paul’s Corner

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You Were Warned!

.

This Saturday in the comments section, I suggested y’all review Ron Brown’s Weekend Report. It’s an excellent review of the current market and Ron gave examples of simple chart actions that you should review and understand a head and shoulder top and the bear flag.

Ron’s Weekend Market Report:

Ron explained the head and shoulder chart formation and he shows the breakdown of the neck line on May 4, which was a nasty day in the market.

So, what does one bad day have to do with the value of my portfolio? Barr always suggests we buy the dip!

As we look back now, that break down through the neck line was a good warning and I’ll wager my 1 share of FB, the big boys were unloading stock from that point on. If you observe and understand a simple chart formation such as the head and shoulders top, next time you see one you might start protecting your portfolio!

After watching Ron’s movie, I took a look back at that May 4 date using my EdgeRater program to see what sort of warning shot we received.

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http://people.delphiforums.com/SNOTZALOT/may4kahunaresized.gif

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The top circled line in the chart shows how the various indexes, S&P 500, NYSE, Dow 30, etc. moved down roughly 30% down through their Bollinger Bands in one day, we had a Kahuna!.  My good friend Ian Woodward warns that when you have a Kahuna with a 3 bucket down day (down 30%) sit up and take notice! A -30% move down in the Bollinger Band is serious!

From Ian’s last blog:

Kahuna (Little and Big) The Kahuna indicator measures volatility and momentum by looking at the one-day change in %B. The Big Kahuna is a 1-day change in %B of plus/minus 0.40. A Little Kahuna is a 1-day change in %B of plus/minus 0.24. Big Kahunas are signs of strong momentum (either up or down) and work well with the Eureka signal to identify tops and bottoms.

In the comments section from May 7, I suggested a review of Ian’s blog from the evening before where he discussed in detail the previous Friday’s 30% decline in the indexes position in their Bollinger Bands. Please review this blog!


Ian’s May 7 Blog Link:

So, we had a major shot across the bow May 4 and what do we see this past Friday? Another red Kahuna! This one was not quite as strong as the May 4 Kahuna, but it’s still a major move not to be ignored.  As Ron suggests in his Weekend Report, this past Friday’s down volume wasn’t large enough to be considered a “bottom” in the market. (Good grief!)

So my friends we were warned a month ago, just by looking at the charts, gloom and doom were knocking at the door. The charts probably indicate we haven’t hit bottom, are you protecting your grandkids inheritance or have you purchased another bottle of Tums?

Breaking news, added Sunday evening, as one would expect, Ian spent Sunday writing a great blog discussing the state of the market and what to watch for. It’s a must read!

The rest is up to you depending on your stomach:  Foxhole, Short, Dabble, but wait for the QUALITY of the Bounce if you are already out, using these concepts to stay on the right side of the Market.  Don’t forget we need Eurekas and Kahunas to the upside. No excuse now after my last blog note of a Glossary of Terms used.

Ian’s Blog Sunday June  3:

Disclaimer, these comments were written Sunday morning and are intended for education only. As we all know, by the open Monday morning all bets and suggestions are off!

Tums?

.

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*********************

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Stock markets and Economies

are more

globalized  and interconnected

than ever

.

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The World’s Largest Economic Block

- The European Union –

is leading worldwide stocks lower.

.

  • 411 uses the yield of the 10 year Spanish bond as a leading indicator of market direction – Our canary in a Coal mine. – Bond yield up = stocks down
  • On 3/2 Spanish bond hits a low of 4.87%, in mid April it tries to hold its 6.0% resistance level and in Early May breaks up through the 6.0% resistance. (see chart Below)
  • All major markets, that are interconnected through trading and especially banking, are fixated on Europe’s slow meltdown

No changes in LTO

till Spanish bonds close

below at 6.25%.

.

Longer Term Outlook

3 months+

.

CAUTIOUSLY BEARISH

.

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK & POTENTIAL LOSS OF PRINCIPLE

CHECK ALL DATA, I MAKE MORE THAN GRAMMAR  ERRORS.



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May 7, 2012

Hope for the Future?

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , , ,

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Hope for the Future

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Teachers/Heroes

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Friday’s employment report had one critical fact,

The number of private sector jobs

since the start of 2009 is back in the black

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The big job losses are coming

in the public sector & its major component is

Teachers

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Just the Facts

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Public employment chart Clinton / Bush / Obama

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Note – The blip higher in @ month 16 is due to census workers. Job losses are at the Federal, State and Local level.

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Public Sector Jobs Created

Clinton = +625,000

Bush = +825,oo0

Obama = -600,000

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American Austerity

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Paul Krugman - New York Times Blog

“If public employment had grown the way it did under Bush, we’d have

1.3 million more government workers,

and probably an unemployment rate of

7 percent or less

..


.

  • As Obama’s stimulus program ran out, so did local funding for state,federal and local public officials.
  • The USA was already falling relative to the rest of the world in education even before this.

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Swimming Without a Suit

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Tom Friedman’s

2009 Editorial on education

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“From 1950 to 1980… we still had the lead in education…now we are 24th in science and 25th in math out of 30 countries.”

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.

Our hope to regain our leadership in education has been crushed since 1980 Republican takeover.

Grover Norquist who wants to reduce  government to the size of a bathtub and drown it, has made Republicans, including Romney, take no new takes pledges even for the wealthiest Americans

.

Our stock market gains 100%

in the last 4 years.

Yet the right trys to take away even the right

of teachers (cops and firefighters etc)

to have collective bargaining.

.

Our Future

.

.

Is there a bright future

if we keep forcing

austerity on education?

.

Solid editorial and inspiration for above – Public Job Losses And GOP Chutzpah by Alec McGillis.

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*******************

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STOCKS

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Trends

.

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Headlines

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  • Greece takes center stage. Huge unexpected toasting by anti austerity voters. Stocks in Greece down 7% this AM. The ruling center left/right party got only 32% of the vote.
  • Most troubling for stocks short term is the rise of far right (pro nationalist) and left groups who are opposed to the sever austerity measures.
  • Since 2008 when austerity measures first started Greece’s employment rate has exploded from 8% to 21%

.

.

How the Hell is a country

supposed to get the

revenue to pay its deb if you

increase unemployment

by over 160%

.

Massive Austerity

creates more problems

than it solves.

.

  • Spanish 10 year Bond Rates [411 uses this as a critical measurement of European/world stock market stability] are remaining relatively stabile considering the news. Yield up to 5.81% at 6:00 AM – Not near 6.0% danger zone. So there is NO big panic.
  • German market down 2% this AM.
  • McCellan Oscillator [411 very successful technical tool in market direction - Tops/bottoms] fell to -27.97.  Range for last 6 months is -100 to +60.  MO in middle of range so lots of room for MO to move up or DOWN =  NEUTRAL

.

____________

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Reading The Tea Leaves

.

..

From Friday – “Major Question remains

Can the US market Rally despite the problems

in just about every other major world market?

.

Answer in US stock market today

will probably be NO

.

.

The Cavalry/Fed/Central Banks

.

The long term stability trend

in Europe is worsening.

.

Who knows how extensive giant “too big to fail” banks are involved in the unregulated opaque derivatives market on European/Greek debt?

.

You can emphasis

balanced growth/jobs

or austerity

.

Austerity is leading to chaos

.

Too many times the can gets kicked down the road in Europe. Each deal on debt according to the voters is too structured in favor of banks or the holders of that debt.


Certainly a liquidity injection by our Fed would help. So would restructuring debt and providing jobs. Who knows how far too big to fail banks can bend? Who knows how far the opaque derivatives market is over leveraged?

.

*************************

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Paul’s Corner

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.

Short Paul’s Corner today, from posts I made this weekend in the comments section for your review:

Your Stock List week one results: LINK

– Steve Gerritz’s Blog:

The rally that began on Dec.19th 2011 has run out of steam. The market is now going sideways in a very choppy manner.

http://stephengerritz.blogspot.com/2012/05/daily-market-snapshot-05-04-2012.html?

- Ron Brown’s weekend video market report:

The NASDAQ was down 2.25% yesterday, but it not yet broken support at

the 2950 level.  Until support is broken at the close, a lower high is

not in place. In spite of the negative day, there were some winners

among the Box Stocks.

Ron does good chart analysis on AAPL and points out a few new stocks to add to the watch list.

LINK

- I often suggest reading Ian Woodward’s latest blog.  Ian posted a doozie this weekend.  He hands you the nuts and bolts of where this market is, where it may be going and what you need to watch for. This is one of Ian’s best and it’s brought to you in living color with every bit of wit and wisdom Ian has to offer.

If you are the least bit serious about your grandchildren’s inheritance this is required reading!

LINK

All of the above for education only!

.

*******************

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Spanish Bond yield over 6.0% =  NEUTRAL

Under 6.0% = CAUTIOUSLY BULLISH

Oil Prices fell another 4% Friday – Outlook Downgraded to NEUTRAL

.

Longer Term Outlook

3 months+

.

NEUTRAL

.

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK & POTENTIAL LOSS OF PRINCIPLE

CHECK ALL DATA, I MAKE MORE THAN GRAMMAR  ERRORS.

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October 31, 2011

What, Me Worry?

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , , , , ,

Who are the 99%


See more of the 99% at

http://wearethe99percent.tumblr.com/

Pass on this or your favorite photo


Tom Friedman’s editorial in the Sunday NYT has an excellent article on the crony, casino capitalism we are fighting against.

Some major points –

  • An under reported Citigroup Fraud “that made GS “look like boy scouts” – No one gets arrested while thousand of Occupy Wall St. protestors do.
  • A comparison to Taharir Square in Egypt’s quest for justice where the “game had been rigged by the Mubarak family and its crony capitalists.”
  • “Capitalism and free markets are the best engines for generating growth and relieving poverty — provided they are balanced with meaningful transparency, regulation and oversight. We lost that balance in the last decade. If we don’t get it back — and there is now a tidal wave of money resisting that — we will have another crisis.”

********************


Euro Zone Doubts

European Debt Crisis


Lots of news outlets over the weekend cast doubts over last weeks  Euro Bailout. Here’s one from NPR’s Jim Zarroli .

But the best (easiest to understand)  is this two minute animated explanation featured in the Guardian.

Click on animation photo for link to video

The impact of these editorials on stocks covered below.


*******************


Raising Cain

Huffington Post headline this AM is about “flavor of the month” (leader through October) Herman Cain having accusations of “sexual harassment” If there is any validity to these charges Cain is toast.

Candidate Rick Perry, last quarter in financially out raised Cain 6 to 1 and even beat Romney.  Money buys elections and flavors last a month. Perry, last week picked up endorsement of Mr Flat Tax -Steve Forbes. If Perry can stop putting his foot in his mouth he would be a very strong candidate.

Mitt Romney took a spank from mega conservative columnist George Will on Romney’s flip flops

Perhaps, Obama’s biggest weakness was how would he answer the 3AM phone call?  He did with Somali Pirate’s, Bin Laden, His #3, and Ka Daffy. Do we want an indecisive flip flopper answering that 3AM call?

*******************


STOCKS


“Deja Vu, All Over Again”???

Yankee Star Yogi Berra

On July 21 st markets rallied on the news of a Euro Bailout Plan – Greek bond holders took a 21% cut , etc. The chart of the benchmark S&P 500 shows a significant rally in above average volume on the 21st. We held onto or confirmed those gains the next day just like last week and the second major Euro bailout plan.

After a weekend investors started to doubt the rescue plan and by Aug. 8th the S&P 500 was down almost 20%.   The question is – are the current doubts strong enough to have the same impact on the investment herd? (see above links and link below)

Click on photo for link

******************


Reading The Tea Leaves

  • Our secondary indicator, the Put Call Ratio is at 1.00. Well below its 50DMA which is at 1.15 = Bullish/Neutral
  • For more on MO & PCR see POSITION Section of blog (scroll down)

alfred_e_neuman.jpg


Technical analysis is all about reading tea leaves, trends, patterns and history/chart patterns repeating themselves. Yes, there is cause for worry. But the bulls have some valid fundamentals on their side too.

  • Strong above average 2.5% GDP results or last quarter in USA.
  • China’s growth numbers has its critics, but again its GDP was over 9% again.
  • Consumer sentiment is down, but consumers are spending more in USA.  Due to top 10% (income) on buying spree and the bottom 90% very worried.

Bottom LineToo hard to make a definitive call on this situation because the manipulators (Central Banks) & shadow banks are hidden in opaque accounting.

However , if you use some inter market technical analysis, the kind John Murphy creates, you’ll see some clear hesitation across currency, bond and commodity markets. (What all this means in tomorrows Investors411)

Same long term outlook till/if we break down below 1225 on SPX.


*******************

Long Term Outlook

3 to 6+ months

Investors411 upgraded its Outlook last Monday to CAUTIOUSLY BULLISH. Reasoning

  • Technically, we broke out of this summers trading pattern. The resistance and now support level for benchmark S&P 500 is @ 1225.
  • Fundamentally, the perception that European banks will survive (see Banksta at War) another over leveraged crisis
  • A 2.5% GDP Growth in the third quarter is NOT a recession number.

CAUTIOUSLY BULLISH

Investors411 has 5 different 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

CHECK ALL DATA, I MAKE MORE THAN GRAMER ERRORS.


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August 3, 2011

Awakening

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , ,

Last Post for Week

Arab Awakening

Investors411 has covered many different points of views of the Arab Spring or Arab Awakening

Often the fear mongering Islamophobia of the Murdoch/American based media was contrasted with how much like us arabs are in just wanting freedom and better living standards.

Tom Friedman, in the NYT, has an especially relevant editorial, especially in light of Syria’s major attempted crack down against democracy. The money quote –

I still believe that the democratic impulse by all these Arab peoples to throw off their dictators is heroic and hugely positive.

YOUR Comments

4 of you have debated if corporations should be allowed periodic tax holidays to repatriate foreign earnings. The majority view seems to be that loop holds should be closed and/or taxes reuced rather than the “once evey 5 year holidays that cut 85% of the tax. “

Add YOUR view on this, stocks and other subjects in Investor’s411 comments section.

_______________

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!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

Index Percentage Volume
Dow -2.19% up
NASDQ -2.75% up
S&P 500 -2.56% up
Russell 2000 -3.26% -

_______________

.

Technicals, Fundamentals & Analysis

Shorter Term Outlook.

day/days/week

  • Massive meltdown in big time volume. Benchmark S&P down 8 days in a row and less than 0.50% away from breaking through major support level – this year’s low.
  • Mea CulpaI should have had a better insight into yesterday’s meltdown.  I’ve instituted a longer term Outlook call for the US economy as bearish, made the May 20th call, but my timing was poor.
  • What the bond market is saying – Economic Weakness, low bond rates, Debt deal stinks. – From Seeking Alpha’s Cullen Roache
  • Like always, after a major move on one day the next confirms or deies the move. All that has to happen for confirmation is holding onto most of the losses. Actually we, have had a series of high volume losses over the last 8 days get confirmed and that’s bearish.
  • Two of our most successful technical forecasting tools listed below -
  • The McClellan Oscillator (MO) chart fell to to -88.61(-30 somewhat oversold, -60 oversold, -90 OMG oversold). MO just 1 point away from OMG Oversold levels. Only 5 times in three years has the MO gone lower. (@-135+ was the lowest in May 2010 -after QE 1 ended and before QE 2 was introduced)  So it could get worse. However Current LevelBullish
  • $USD The Dollar rose again +0.34% yesterday (+/- 0.50 is a significant move and the dollar is usually a contrarian indicator) Technically we are sitting near bottom of a trading range. A minor two day move higher. Overall = Neutral
  • Reading The Tea Leaves - I’ve mentioned DeMark Indicators before. He has a nine day indicator that says US markets should at least take a break today (this would be the 9th down day in a row for S&P). Also the volume looks like its reaching climax sell off levels (when taken as a whole over 8 days) and the MO is almost at OMG levels.  All this shows a bottom approaching, but their is some downside wiggle room between a -89 MO & -135 MO (see explanation above)
  • Never Forget its is High Frequency Traders (This group is made up of high net worth individuals and entities) that now account for the vast majority of trading. You’re average investor has left a long time ago. Another $32.2 billion of less wealthy traders left mutual funds last week. (see yesterday’s update)

Longer Term Outlook

weeks, month, months

  • Repeat – Some serious damage has been done to the US political structure as a functioning body. Even though we didn’t default everyone now realizes that there are a sizable number  of US politicians who are willing to hold the US economy hostage to their ideological beliefs.
  • Repeat – For Main Street USA this means uncertainty. This will be devastating.  The debt crisis deal will cost jobs rather than create them. If you contract the money supply in the USA it means less jobs.  Investors411 mantra - How do you fix any deficit without jobs?
  • May 20th forecast still stands. The recent Washington debt crisis debacle has focused everyone on cutting the money supply.  Simple math – The less money that’s out there = less jobs = greater chance the “Great Recession” returns. European debt and emerging market’s inflation fears add to this. Quantitative Easing (QE #1 & 2 plus stimulus kept our economic heads (especially the stock market) above water.
  • JP Morgan seems to have recently overtaken Goldman Sachs as the #1 prognosticator out there and their chief economist says –

“FISCAL POLICY WILL CUT OUR 2.7% 2012 GDP FORECAST TO SUB 1%”

Until the Fed comes up with QE #3 or some other liquidity measure, stocks and especially the US economy are beginning to look like a double dip recession.

______________

Paul’s Corner Extra

This past week we looked at evaluating the market using Bollinger Bands (BB). Briefly if a stock is above the middle of the band good, if below the middle of the band bad.

I use a product called EdgeRater each evening to count the number of stocks in the S&P 1500 that are above the middle of their Bollinger Band or below the middle of their band. Last evening the results were shocking. Only 7% of stocks closed with a %B above 0.5. (Above the middle of their BB) Even more impressive 50% of the stocks in the S&P 1500 closed below the lower BB.

This shows an extremely over sold market. Numbers comparable to the flash crash and the ripping 08 down turn.

Barr likes to use the MO for market evaluation. Yesterday the S&P 1500 had a MO of -133, All Securities Index -80, NYSE -88, and the Amex -60. The MO summation index is pointing straight down and needs to bottom and start pointing up before is really safe to play. If you wish to bottom fish, good luck.

Oh for those of you who really don’t believe in chart reading, indicators and spending the $60 a month that I do for HGSI, July 27 HGSI gave a strong exit signal for the market.

My friend Ron Brown from HGSI sums it up nicely this morning:

“the markets are extremely oversold, but on the other hand, we have not yet seen a washout day where there is heavy selling at the open and the market reverses intraday to form a hammer. If you step in front of this moving train, make sure you know where you’re getting out if the balance does not materialize.”

So what’s the market going to do today, is this a new morning in America? Let’s load up ThinkOrSwim………here we go folks another day of fun!

Remember, you are responsible for your investment decisions, and I am not. Please do your diligence, and please take ownership for your actions because I‘m sure not going to.

______________

Current Positions

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

NLYAnnaly Capital Mgt. Ultra high dividend stock – It’s been shaky, but so far NLY has held up reasonably well through current stock market slide.

In  my personal portfolio I still have a Put position to protect NLY. (strike price $17.00 for 3rd Friday in Sept)

GLD(Long Gold ETF) Bought at 157.1 last week. (see last weeks blogs and comments section) –  Getting way too over extended above its 50 day moving average.  Have put stop in at 157.15. Yesterday up 2.41%.

If you’re a short term trader, you probably should take your profits in a rally for GLD.  Longer term investors probably should wait for better dip to buy opportunity.

Disclaimer - Personally I own  a group of dividend stocks including NLY. I have placed puts on one ETF of a major index and a couple of dividend stocks. I buy everything in the hypothetical Investors411 portfolio. I own some TZA & SDS (ETF’s that double and triple short the market) as hedges.

Mea Culpa – Bad move yesterday to remove some short positions.

JS in the comment section has used the term ”insurance” to describe the way ”Puts” are used protect long term investments. – email me if you want to know more or post a question in the comments section.

________________

Long Term Outlook (for US Economy)

BEARISH

_________________

Look for an enlightened Paul’s Corner every Tuesday & Thursday and the always informative Comments Section every day.

_________________

Long Term Outlook (for US stocks)

NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

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December 17, 2010

375 Days

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , ,

375 Days – START

Its now been 375 days since American inspectors have been allowed to inspect Russian nuclear weapons facilities. 5 months since the original treaty was signed. In that time 900  questions asked by Senators have received written answers on the next START Treaty. The treaty has been endorsed by everyone from the Joint Chiefs of Staff to Condi Rice to our NATO allies.

The globe realizes that terrorism is the #1 enemy.

Doesn’t it make sense to better secure these weapons to protect not only our troops, but our own lives. “Trust but Verify” was the credo when this started and it should be today.  So why are so many right wingers doing everything possible to destroy this treaty and give terrorist  a potential bigger less transparent supply of nukes  to choose from?

  • Tom Friedman quote in an earlier Investors411 mentioned they don’t want Obama to have success. Imagine putting politics in front of the safety of Americans.
  • There are many on the right ,like their #1 spokesperson, Rush Limbaugh who believe Pelosi & Reid are the terrorists and the administration is like Al Capone’s
  • There are those who want endless war with the rest of the world.
  • There are those who realize that the military industrial complex desperately needs to kill this treaty because it will cost $10 or perhaps $100s of billion of dollars  in revenue. Just imagine the  fear mongered money  to be made if the world started to rearm with nukes. Big campaign donations at stake here.

There is a very powerful oligarchy who make a lot of $$$$$ from fear. They know how to manipulate the frightened sheep, even in obvious cases like this.

-

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!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

Index Percentage Volume
Dow +0.36% up
NASDQ +0.77% down
S&P +0.62% flat
Russell 2000 +1.07% -

Technicals, Fundamentals & Analysis

Investors411 record – 5 years of beating benchmark S&P 500

The Obama Tax compromised passed last night. It will have no short term impact on stocks, but an obvious long term impact because it raises GDP & deficits, and creates jobs. Reuters has an interesting  “all candy and no spinach” analysis “but at least it shows that President Barack Obama and Republicans can cooperate on fiscal issues.”

Investors are by the boatloads are getting out of Treasury bonds. This is really a massive move. The Tea Leaves here are saying these investors see an IMPROVING economy and that should mean inflation. Dave Moenning is a very credible analyst on why the “herd of investors” are getting out of bonds

“now that even amateur economists can see that the economy is improving and everyone and their grandmother is saying that it is time to “sell bonds and buy stocks,” no one wants to be caught with an oversized amount of government bonds on their books going into 2011.”

Significant Shorter Term Forecasting Indexes

  • The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] The dollar was flat yesterday -0.10%. yesterday. near top of short a consolidation range = Neutral
  • The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China, emerging markets,&  exporting countries]Rate of fall increased to -0.93%yesterday. Broke downside support a couple bays back, downside momentum is trouble = Bearish
  • McClellan Index – (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] rose to -3.09Neutral

Reading The Tea Leaves -

The bears strongest case is the falling BDI – Lower trading prices show a slow down in in imports/exports. This translates into a right now very small drop in GDP for emerging markets. If it continues we have problems. Obviously housing, European debt & employment problems exist.

The bulls case – Fed Ex was the latest sign that American companies are improving (the herd believes this) + QE 2 juice + Obama compromise juice+ India & China growing at 8 to 10% GDP (a 1% slip not that bad)+ everyone panicking to get out of bonds (where does the $$ go – stocks)  = Strong set up for January earnings reports.

Relativity – The US dollar rises almost 1.00% two days ago and stocks loose some ground. The dollar falls 1/10th that amount and stocks rally more than the fell the previous day

Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

(I do manage 6 accounts that have other positions).

Current ETF Positions. (oldest held positions listed first)

  • EEM - (Emerging Markets ETF) -1/2 positions sold
  • #1 UWM - (2x small cap stocks ETF) – Sold last 1/2 bought at 38.75 sold at 40.34 Gain almost  +7%. First 1/2 of trade made +9% so total trade = +8%
  • #2 UWM-
  • #3 UWM

Mistake, at least in short term, to sell 1/2 UWM position early in day because the ETF was up 2% for the day. Still looking to buy dip/add to positions with leveraged ETF’s

New considerations

  • EUO - an ETF that double shorts the EURO – Europe far more than the USA is taking fiscal medicine to solve debt crisis. More importantly they are becoming fiscally transparent while we remain opaque. So in short term Euro is going to suffer.
  • PST - an ETF that double shorts 7 to 10 year treasuries. This would be a short term trade. The herd is stampeding to get out of Treasuries before years end.

The first would be, hopefully, more long term the second a trade.

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including ”YOUR Stock List.” -

Longer Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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December 2, 2010

Home Run’s & Strike Outs

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , ,

Thomas Friedman

Tom Friedman Pulitzer Prize winning NYT Editorialist

The Strike Out

The Date – June 29th 2005

The Editorial - The End of the Rainbow – Ireland

Ireland adopted an unbelievably lowest corporate tax rate of 12.5%, America’s shadow banking and casino capitalism (AKA free markets). Tom does an Irish jig for joy over what he sees as a bright  future. Tiny Ireland now needs a gigantic EU bailout and austerity to just survive

The Home Run

The Date – December 1st 2010

The EditorialFrom WickiChinaChina

What the Chinese officials on their way to world economic domination would be saying about our self destructive government and media if WikiLeaks. At first I laughed then it was just sad. A sample  -

There is a willful self-destructiveness in the air here as if America has all the time and money in the world for petty politics. They fight over things like — we are not making this up — how and where an airport security officer can touch them. They are fighting — we are happy to report — over the latest nuclear arms reduction treaty with Russia. It seems as if the Republicans are so interested in weakening President Obama that they are going to scuttle a treaty that would have fostered closer U.S.-Russian cooperation on issues like Iran. And since anything that brings Russia and America closer could end up isolating us, we are grateful…

Well worth reading and passing on to your friends,

START

Strategic Arms Reduction Treaty (Part 2)

YOUR CommentsYankee Bob is back and you can read his full comments by linking to yesterday’s blog. Here’s how he starts

There was nothing heroic about Ronald Reagan. He declared war on the government and did much to land us in this deregulated un-unionized social welfare state for the rich and corporations. Beyond the petty politics he was a murderer. He gave funding ,training, aid and comfort and the green light to Death Squads all over Latin America. He condoned torture and murder without due process to further his political agenda…

Jim J concludes

I understand that the joint Chief of Staffs all support the new START treaty. What happened to Republican patriotism?

Paul R on START

I don’t recall who recently said it, but when asked about rep support for START his comments were “sure, but we need to modernize the military first”. “Military” Republican stimulus plan

START – Part 3 (tomorrow)

Stocks

Investors411 tries to keep it basic.

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 +2.27% up
NASDQ +2.05% down
S&P +2.16% down
Russell 2000 +2.22% -

-

Technicals, Fundamentals & Analysis

Investors411 record – 5 years of beating benchmark S&P 500

World Stocks - December has historically been the best or outstanding month for stocks.

USA – Today is confirmation day for yesterday’s rally. If stocks can come close to holding onto their gains or improve on them the rally gets confirmed. This more often than not means our newly born bull will continue to grow. The big news is still Friday’s jobs report. Built in are expectations of improvement.

Europe - Early in the day there was hyped news that the US Treasury was going to help Europe with its problems – later it was denied.

Emerging marketsEEM the ETF for emerging markets was up +2.87% yesterday. Good news especially for long term investors is that emerging markets outperformed the major US indexes. USO – (oil ETF) another rally leader +3.22% UCO (leveraged ETF 2x oil +6.20%) When energy prices move up it often not only reflects economic expansion in USA, but increasingly emerging markets.

Significant Shorter Term Forecasting Indexes

  • The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] The dollar fell significantly again -0.61% yesterday. Dollar was over extended to up side and one day rebound is not yet a trend = Bearish/Neutral
  • The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China, emerging markets,&  exporting countries]Rate fell slightly -0.14% yesterday. Trend down but its leveled off = Bearish/Neutral
  • McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] rose to -15.90 Plenty of room for action up or down. = Neutral

Reading The Tea Leaves -

The “Good News” from yesterday was - Trend exhaustion  -49 on the MO shows we are technically reaching a point where there are fewer and fewer sellers out there.

Congratulations to several of you who recognized how over sold markets were getting and took the risk by buying the dip on Tuesday.

Ideally you’d like the MO over -60 but The Critic (see comments section of yesterday’s blog) is right – generally – the lower the MO goes the better your chances are for catching an oversold bounce and a more successful longer term trade. Her statement from comments section -

“So I buy when the MO is at -50. There’s much more room from -50 to +100 than -50 to -100. The odds may not be perfect, but they are in my favor.”

Also -The McClellan Oscillator (MO) and other forecasting tools are far more related to broader Indexes or ETF’s than individual stocks. Example - Paul R points out how over extended both DECK & IMAX are right now in the comments section.

How you play the MO and other  forecasting tools depends on your level of risk. The Critic uses leveraged ETF’s (EWM, SSO, UCO & TYH) as part of her portfolio and although she has NOT announced it in the comments section she has done quite well. TYH was up +6.53% yesterday. If she bought near the previous day’s low the total gain was +10% She also has a diversified portfolio of long term assets and uses YOUR Stock List.

Direxion and ProShares are the two companies that offer leveraged ETF’s. See POSITIONS section for blog for links. Obviously something that’s leveraged 2x is less risky than most 3x leveraged funds.

Bottom Line – As I stated in the comments section – This big a move off a retest of a major support level. It usually indicates that the rally will continue. (This Retest = Price moves down to support level,  remains above the support level for a period of days (9 days), then falls back down and retests strength of the support level. It held. Then, in one day stocks moved higher than the higher of the previous 9 days – A breakout. = Bullish

Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

(I do manage 6 accounts that have other positions).

Current ETF Positions. These are, hopefully,  longer term positions

  • EEM - (Emerging Markets ETF)
  • UWM - (2x small cap stocks ETF) This is now up over +7% since it was bought @ 10 days ago. Once a leveraged ETF goes up 5+ % I usually sell 1/2 or put a tight trailing stop on that 1/2 of @2% on it each day. I’ll do this today.

From YesterdayThis means at least a short term oversold bounce. And what a bounce it was.

Long Term Investors - Mea Culpa – I like the odds to be more in our favor before making major long term investment. So I did NOT put out a clear BUY signal. However realize if you can tolerate the risk -60 on the MO is NOT a line in the sand and like The Critic you don’t have to wait.

THE PURPOSE OF INVESTORS411 IS TO EDUCATE YOU ON HOW TO USE SOME BASIC FORECASTING TOOL AND ACT ACCORDINGLY. Stock Markets are moving faster than ever before and by the time I get the information out it sometimes has gone stale. Also I’m NOT watching stocks move all day and sometimes ignore markets entirely. THEREFORE, USE INVESTORS411 AS AN EDUCATIONAL TOOL - If you have a problem I will answer your email ASAP.

Investors – A -15 on the MO still gives us some wiggle room. Considering UCO and more UWM on a dip today. This is a higher risk trade/investment.

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including “YOUR Stock List.” -

Longer Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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November 19, 2010

Overdrive Goes Over Top

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , ,

Welcome to the Resistance - Investors411

A blog that promotes transparency in democracy & capitalism, and beating the results of the S&P 500

Overdrive Interactive Wins

Overdrive won TWO awards last night at the Massachusetts. Innovation & Technology Exchange. The People’s Choice Award that lots of you voted on. Thanks!

Many members of the company get this blog and they are the ones who provide the tech support to keep Investors411 blog alive.   This year’s award might be posted here by the time Investors411 is published. Overdrive is a smaller company (50+) going up against giant competitors.

Both my wife and I deeply appreciate your vote, support, or work you do for our son’s company.

California Wakes Up

Congratulations to the state of California. A major win for Democracy. Instead of having a committee of politicians drawing up politically gerrymandered  districts the state will have ordinary citizens do it.

Why Obama’s Message is Blocked

Tom Friedman has an excellent editorial on what’s wrong with American media -Too Good To Check

Fox news started an unsubstantiated false rumor that Obama’s trip to India would cost us taxpayer’s $200 million a day and he was to be accompanied by 34 naval ships. This story was spread by members of congress, networks, and every right wing outlet. One Journalist alone, Anderson Cooper, checked out the facts.

A few outlets admitted their mistake but that was at least 1/100 of the time they spent bashing Obama. We even got chain emails bashing Obama on this.

This is probably why more people believe in the lie that the India, Indonesia & G20 trip cost the American tax payers billions than know Obama cut your taxes in the Stimulus bill.

Democracy dies when we vote on misinformed lies.

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!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

Index Percentage Volume
Dow +1.57% up
NASDQ +1.55% up
S&P +1.54% up
Russell 2000 +1.85% -

Technicals, Fundamentals & Analysis

Investors411 record – 5 years of beating benchmark S&P 500

US Stock Markets -

Yesterday Investors411 used the Wall Street term Dead Cat Bounce with a “?” It sure looks like the cats were wearing helmets yesterday. Question is – Can they get through today?

funny-cat

Stocks rallied in the first hour and held onto their gains all day = Bullish

Big news of yesterday is the GM IPO= +3.61% Historically after the first few days IPO’s fall. Then they establish a base and move with the bulls or bears.

Major story of day will hurt stocks. China raising interest rates again to keep economy from growing too fast. The rate hike was expected (big part of reason stocks moved late last and early this week), but the amount - 50 basis points and the timing today are probably not expected by investors = BEARISH

Significant Shorter Term Forecasting Indexes

  • The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] The dollar reverse direction and fell significantly yesterday. Fell back to what was its resistance and is now called a support level. For stocks = Neutral/Bullish
  • The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China, emerging markets,&  exporting countries]Fell  another  -1.10% yesterday. Major support recently broken, but rate of decline keeps decreasing = Bearish/Neutral
  • McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] fell dramatically out of oversold territory to -30.60 = Neutral
  • 10 Year Treasury Bond (TNX) [Bonds compete with stocks for Investors. Rising TNX also signals inflation. Rising yields bad for stocks] Fell throughout the day but moved =1.33% higher For stocks = Neutral/Bearish

Reading The Tea Leaves -

The Forecasting indexes have changed to mostly Neutral & its the confirmation day after  big rally. China news is going to hurt.

From yesterday in brownThree paths in descending order of preference.

  • Yes the bottom -TJX (Target) had a great earnings report and outlook. Oversold markets & 50DMA support levels hold. GM IPO energizes markets
  • We’re in for an acceptable 5 to 10% consolidation after a nine week bull run with a S&P support level of 1130. (SPX now at 1179)
  • A double dip recession is out there and Investors will soon realize the horror as foreclosures rise, Europe falls apart

The problem here is – if you combine choices the more bearish choices #s 2 & 3, are larger than #1.

The GM deal with a potential strong Christmas season and QE2′s print & dump could swing an oversold market. – It did. Today is a confirmation day for yesterday’s big rally but the China news is going to hurt.

  • Stocks remain flat or go higher = confirmation & good
  • Stocks loose up to 1/2 their previous days gains = fair
  • Stocks loose more than 1/2 the gain = bad
  • Stocks loose all gains or more = duck and cover

Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

(I do manage 6 accounts that have other positions).

  • EEM – (Emerging Markets ETF)

Short term Traders. – See no clear advantage to a trade today, although momentum is with the bulls.

Investors. [From yesterday in brown] The MO goes below -60 buying becomes a much better option. Twice in the last 3 years the MO has reached -130. So you could loose out especially if there is a double dip recession. So I started small and nibbled on a little EEM (emerging market ETF) A  position at 45.28 Willing to accept a 7 or 8% loss on this. If we keep going lower I’m going to add some more EEM and country specific ETF’s on dips. (See POSITIONS Section of blog.)

Investors411 main strategy is to “buy the dip” in a positively trending market. When panic is in the street we buy.

I think the chances of a double dip recession are remote, but a flatline US economy coupled with (right now over heated) growing emerging markets is more possible.

Long Term Outlook has been changed back to CAUTIOUSLY BULLISH from NEUTRAL. It will remain there unless the major US indexes fall back below their 50 day moving averages of pice (see charts on top right of blog) CAUTION – We are on the cusp of change so Long Term Outlook might flip flop for a while.

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including “YOUR Stock List.” -

Longer Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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November 12, 2010

Snidely Whiplash

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , ,

Gang of 21

Snidely Whiplash – Shadow Banker

Imagine if you will, a gang of 21 Snidely Whiplashes [AKA Shadow Bankers.] The problem is you don’t have to imagine – THEY EXIST

Here’s the List of the Fed’s 21 Primary Dealers. Just what powers do they have besides borrowing money for nothing and what are they now up to?

  • You can sell bonds to them and get freshly minted greenbacks in return.
  • Our government has blessed them with opaque accounting rules so who knows what they do with the money.
  • The bulk of their money certainly is NOT going into mortgages or helping small business grow -
  • Lots of Dudley Doright’s (Snidely is Dudley’s arch enemy) suspect that that money is going into Black Box/High Frequency Trades that keep pushing stocks higher. They invest on algorithms and market distortions NOT valuation.
  • Lots of Dorights suspect the money is going into more complex massive derivative market – A still totally UNREGULATED Market
  • Who believes shadow banking culture has changed?
  • Did the Sindlely’s buy off enough in congress to crush banking reform? Will they further weaken reforms in place?

Life is pretty good if your name is Snidely “Big Taxpayer Bonus” Whiplash right now.

Dudley Doright (below)

CiscoWhy their earning Matter to YOU

Teach giant CSCO earnings report shattered the stock yesterday (-16.21%) Its report showed slower than expected growth in Europe, US and especially government spending.

In the US the Obama stimulus/tax cuts, and other world wide stimulus programs have run their course. The US stimulus along with the The Fed’s “print and dump” of $$$$ has been primarily what’s holding up GDP in the USA and improving the jobless picture.

The training wheels have come off the economic trike and yesterday and Cisco is saying things don’t look good. Add to this

  • Palin and other Tea Kettlers (Tom Friedman term) have come out against Bernanke and the print and dump of Fed cash.
  • Lots more Republican governors after election who are going to further cut state spending.
  • No new stimulus seems likely in Congress with Republican takeover of the House.
  • Many European governments are cutting government spending also.

Emerging markets are doing well, but the US & Europe are running along an economic cliff with blindfolds on. Long term we do need to make some serious decisions about our economic future. See NYT editorial – Some Fiscal Reality – that Popeye suggest in comments section of blog.

Fiscal reality while running along an economic cliff.  Yikes.

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!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

Index Percentage Volume
Dow -0.65% up
NASDQ -0.90% up
S&P -0.42% up
Russell 2000 -0.45% -

Technicals, Fundamentals & Analysis

Investors411 record – 5 years of beating benchmark S&P 500

US Stock Markets -

Big volume behind yesterday’s selling with CSCO leading the way down -16.21%. Lots of that volume was the massive 500+ million CSCO shares traded.

Stocks keep absorbing body blows of bad news. See below. We reached a critical resistance level for the dollar. If the dollar breaks out of its range to the upside it should be one uppercut to the chin that could send stocks tumbling to the mat.

Under what used to be a normal market where Investors & a stocks value ruled bears would already be in charge. Mantra - Black Box/High Frequency traders dominate 50 to 80% of this market and they are buying the dips.

Significant Indexes

  • The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] For the 4th day in a row the dollar rose a significant amount. +0.75% yesterday. Dollar broke its support level last week, but yesterday it broke back up through that resistance level. The trend for stocks = BEARISH/Neutral
  • The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China, emerging markets,&  exporting countries]Fell  a massive -3.59% yesterday. BDI now consolidating after bull run that began in June. The BDI has been overshadowed by the dollar moves. Sitting directly above major support. Big breakdown though its support level = Bearish
  • McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] Fell  to -20.02 yesterday.  = NEUTRAL

Reading Tea Leaves.

Three major Bearish sign emerged yesterday.

  • The BDI broke down through its support in a BIG way -3.59% Probable cause – No real unity apparent at G20 hurts world trade.
  • The USD has had a massive 5 day rally. Sure looks like its resistance level will crumble today. (see chart). Stocks have held up remarkably well through the dollars assent, but breaking through resistance is BIG. . If two resistance lines fall – watch out.
  • CSCO massive 16% decline held up though out the day. This is a huge drop for a major major tech stock on earnings. The rest of tech did remarkably well,

When you add CSCO to the dollar’s rise & the BDI’s fall its three strikes. Perhaps a silver lining here is the falling 50 day moving average for the dollar (another significant resistance level) is just $0.56 higher. The dollar is rising like a rocket, but taking out two signicant resistance levels may be hard.


Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

(I do manage 6 accounts that have other positions)

  • EWS (Singapore)
  • EEM (emerging Markets) Have stop on position at what it was bought for.
  • DGP (2x gold)
  • TYH (3x tech stocks) Bought at 40.63 yesterday. Sold 1/2 near close at at 42.06 for minor @ 3/4+% gain. Stop on the rest at 39.25 – If this gets stopped out today then there will be no gain

Short term traders – TYH was bought because the BB/HFT traders keep supporting stocks. The dollar’s gains were significantly for the 5th day in a row so I sold 1/2.  Probably should have sold it all – but greed won.

Not entering any positions on dip today, but watching UUP (tracking ETF for dollar closely).

Traders & Investors with tolerance for high risk.-  Any significant drop in equities should bring the MO down to -25 (see above) support level and an opportunity to buy. Today is very significant, if we end up with the Dow down 100+ points it will mean the MO has broken support and is probably on its way to -60 or beyond. That would be a point we could start to nibble again.

Investors - I know its been a long wait for the MO to agin get close to -60/oversold/ safer to buy area. Be patient and also remember when we cross -60 everyone going to be saying the sky is falling. MO at -20.02 and today some major bearish signals came into play. So we should reach oversold soon. Today is very significant, if we close with the Dow down 100+ points it will mean the MO has broken support and is probably on its way to -60 or beyond. That would be a point we could start to nibble again.

Remember we are revising YOUR Stock List so send in your choices to me or post them in the comments section of blog. YOUR Stock List works because YOU send in stock ideas. Here the guidelines for entries.

  • The 50 day moving average must be moving up. That’s the blue line if you are using Stockcharts
  • No thinly traded stocks. Absolute minimum $2.5 million dollars worth of this stocks traded each day.  (example over 500,000 shares traded and worth $5) Over $5 million is preferable. Smaller stocks are too easy manipulated by major players.
  • Maximum 2 entries.

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocksETF’s including “YOUR Stock List.”

Longer Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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