Bank of America

A Trillion Dollar Fraud

Over the past few years we watched as the Obama administration has caved into major industry groups and given them huge financial mounds of money and freedom at left the taxpayers to subsidize the risk or pick up the bill. Every major bill has given the lions share of profits from whatever “compromise” or major piece of legislation to a wealthy oligarchy within various industry groups – Insurance, military manufacturers, shadow banks etc. (See a year of past Investors411′s)

Yesterday Bank of America was given mana from heaven from Tim Geithner, Obama’s Secretary of Treasury.  BAC had is biggest single day stock gain in this year. It broke out of a trading pattern and rocketed 6.37% higher.

What happened was BAC settled with the government over their responsibility in 2008 financial meltdown. Analysts had expected their liability to be in the 10′s of billions range and Geithner and BAC negotiated for a payment of a few billion. Guess who ends up getting hurt the most my this? – YOU.

So much for accountability as a major shadow bank ends up squeezing YOU the American taxpayer.

Obviously none of the major media outlets are going to carry this news and to the Average American the couple of billion in the settlement sounds like a big number.

This is a backdoor bailout and more will come where losses are transfered from shadow banks to the government. (Fannie & Freddie) If you’d like to read more , John Lounsbury in Seeking Alpha – Click on LINK below

BofA Settlement With Fannie and Freddie: Part of a Trillion Dollar Fraud

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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

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Index Percentage Volume
Dow +0.81% up
NASDQ +1.46% up
S&P 500 +1.13% up
Russell 2000 +1.90% -

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Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

  • Biggest rally in a month. A breakout in increased above average volume, = Bullish.
  • Big news at end of week is the unemployment report.
  • There’s  POMO buying by the Fed today and each day (differing amounts) till next Wednesday when the new schedule will be announce. (see past updates for more on this and what POMO means)
  • Translation of above for stocks short term – bullish
  • Another translation – US stock markets are being “manipulated higher” and manipulations almost always create bubbles.
  • The BAC settlement had a lot to do with yesterday’s rally (see above)

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Significant Shorter Term Forecasting Indexes

  • The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] A big dollar fell apart and the dollar rose slightly  yesterday  +0.25%. For stocks this is = Bullish
  • McClellan Index – (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] fell a bit to +34.09  We’re getting up there (approaching +60) and this is a new 8 week high. So time to be careful  about going long. But stillNeutral
  • 10 year T Bill (TNX)  In consolidation pattern  Some big recent moves shows big indecision = Neutral

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Reading The Tea Leaves

From Yesterday -The Bulls are back. - We had the biggest rally in a month.

Today is a confirmation day – If we hold onto most of the gains bulls rule.

Fed on a 6 day spree of buying bonds from its biggest member banks (see above) – bullish for stocks

The McClellan Oscillator has been hovering around neutral for a long time. It  has also been in a bullish  pattern of higher highs and higher lows (see chart above) However we have almost reached levels that start to show stocks are overbought.  This has to be balanced with the following.

Over the last few sessions, Investors411 has given you data showing some (key word some – definitely not massive) is flowing back into stocks. This in combination with the Obama Tax Compromise and QE2 should give the same punch to US stocks that the Obama Stimulus and QE1 gave back in mid 2009.

The bears side of this discussion is that we have already come so far so fast that this stimulus is NOT going to matter. Investors411 has outperformed the S&P 500 since over the last few years by using the McClellan as our main tool for when stocks are oversold and overbought. The long term outlook continues to be CAUTIOUSLY BULLISH.

Bottom Line – Short term – Bullish, would temper this if/when MO gets over +60.

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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)(see comments section where all trades are first announced)

  • #1 UWM - (2x small cap stocks ETF) – 1/2 position -Will put a 1.5% trailing stop on this again today.
  • #2 UWM
  • SLV – (Silver ETF)
  • DGP -(2x gold ETF)
  • REMX -(ETF for Rare Earth Metals) Bought yesterday at 24.52

Under consideration

UCO -(2x oil prices) From Friday – Too high waiting for dip..

REMX (Rare Earth ETF) – Will consider more on a dip. Limited supply. China which dominates market is limiting exports. All this makes for a massive supply/demand problem forcing prices higher.  Rare earth goes in everything from hybrid cars to TV’s

EWZ (Brazil) & LBJ ( 3x Latin America – majority Brazil) Obviously the later is more risky because its leveraged 3X. On a role with 5 big up days in a row. Short term traders may risk buying a dip, but again afraid there will be no dip

US Financials – The major shadow banks are outright getting away with Financial robbery – Probably over a trillion dollars and no accountability. They run an opaque system of accounting and have a cozy relationship with the Obama administration – These bastards are going to do well in 2011. Will dig up some relevant ETF’s tomorrow.

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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.” (YSL#3)

Longer Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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