A Frog in Hot Water

The old adage goes – Throw a frog in hot water and he’ll jump right out, but you can slowly bring the water to a boil and that frog will stay put.

A little known Republican State Senator, Scott Brown , won a stunning upset victory in the MA Senate race last night. Like Mitt Romney in 2002, he beat  Dem. Shannon O’Brien, Brown toasted another woman who ran a weak campaign – Martha Coakly.  For perhaps the best analysis of what this means see Nate Silver’s Let’s Play The Blame Game

Health Care – Obviously in deep trouble. The only way Health Care would pass is if the House passes the Senate Bill. Since Democrats in the House have already voted for a far more progressive health care plan and will get hit for that in the next election Obama is going to argue why not vote for the Senate version.

Bottom Line – Health care. – You blew it – RIP

That Frog in this case is the typical American worker who is in the pot of ever increasing temperature .

  • Globalization is slowly eliminating working class jobs across America
  • Weapons budgets are growing at the rate of 10 to 20% each year
  • For the first time in our history we cut taxes and went to war.
  • Our federal and trade deficit exploded from 2000 to 2008.
  • The era of cheap oil is OVER. The supply has peaked and the demand from billions of people in emerging markets is growing.
  • Because of our suburban sprawl and relative lack of public transportation we are far more vulnerable to high oil prices.
  • Time tested solutions like stimulating the economy to fix it will not work as well because of our already huge deficit.
  • There fewer and fewer laws to govern excess GREED on Wall St. Main Street has socialized the risk for Wall Street
  • The rich in the USA are getting richer and what’s left of the American working class (those not newly unemployed) are paying the bill
  • As the situation worsens, self preservation kicks in, and Americans care less and less about others.

The American frog is in a pot that’s getting hotter and hotter.

There is an upside to all of this outside the USA. Hundreds of millions (perhaps billions) in emerging markets are increasing their standard of living. They have or are learning to Manage their capitalism and hopefully not repeat mistakes that were made here.  Greed is a powerful factor and one hopes eventually more democracy will grow abroad.  If Time magazine called the last decade The Decade from Hell for the USA – it could get a whole lot worse for the American frog in this decade.

KISS & Stocks (Keep It Simple Stupid)

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


Index Percentage Volume
Dow +1.09% down
NASDQ +1.42% down
S&P500 +1.25% down
Russell2000- +1.75% -

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

Technicals, Fundamentals & Analysis

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

Stocks staged a major rally (above 1%) in decreased, average volume. Volume, our #1 confirmation factor did NOT confirm the move higher. Even though we achieved some new highs (for a calander year) on 3 of the major indexes we are doing it in reduced volume.

  • McClellan Index at +i3.14 = A little bit overbought.  There’s a long way to go till we reach @-60 or oversold or @ +60 or overbought

IBM reported after the bell and beat top and bottom line expectations. This was not a grand slam, but IBM did solidly better, but lost money in after hours trading.   The important news from IBM which does 60% of its business abroad was that their areas of growth were "Brazil, China, & India."

Even though stocks rallied yesterday still believe in down week.


The  Positions Section (also at top of blog) has the latest buys and sells (Usually updated over weekends)

These are positions I actually own


YOUR Watch List of Stocks . Unfortunately, I’m not daily checking these stocks out. Ideally, you’d like to McClellan index below zero (the further the better) and these all would be better buys. We developed most of these potential stocks about two weeks ago. Check old Investors411 for more.

Again the problem with buying now is that markets are slightly overbought and you would like stocks oversold position. Click on ticker symbol for chart. Going to limit Watch List to @ 10 stocks.  80% of investments wil be ETF’s 20% stocks.

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

  • SEED In a buy the dip position.
  • AAPL big +4.42% rally yesterday. Sitting on breakout point. AAPL moves markets – if this goes higher so does the market.
  • AMZN We sold at highs and AMZN has formed lower highs and lows. In bearish mid term pattern. Will drop from list soon
  • HMIN - Failed breakout, back at lower end of trading pattern. Will drop from list soon
  • CAAS Buy the dip opportunity as CAAS falls to just above 50 day moving average.
  • PCLN Buy the dip opportunity
  • F Still too over extended to buy
  • DRWI New – Big exporter to China -  Looks great but still too overextended to buy
  • ENOC New – Reduces costs for utilities – Great long term chart. formed base for last 5 months moving higher – A buy
  • ATHN New - Software reduces costs for health care - Clear trend higher since June Buy the dip opportunity
  • IMAX Great long term chart – falling back to its 50 day moving average. A buy the dip opportunity

Mistake – I let my emotions over rule logic on IMAX It was too overextended from 50 day moving average to buy at 13.9. So I’ve sold the small position (1% of portfolio I bought at 13.9 for 10% loss) Keeping 1% bought at 12.9 and will add more at lower price.  Perhaps the most important rule of investing learn from mistakes and do not repeat them.

If markets were overbought I’d strongly consider ENOC, CAAS, ATHN, SEED, & PCLN.

See POSITIONS (scroll down) for details on this and what’s under consideration for 2010.



  • Share/Save/Bookmark