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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 -0.79% Down
NASDQ -1.53% Flat
S&P 500 -0.97% Down
Russell 2000 -1.46% -

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Technicals, Fundamentals & Analysis


  • Clear 5 week chart pattern of lower highs and lower lows = Bears Rule. (see charts of major indexes on upper right side of blog)
  • For those of you who are sophisticated investors – Do NOT be mislead by volume figures on major indexes they have been made largely irrelevant by High Frequency Traders who make up 60+% of the volume.
  • The quantum shift is markets used to move higher on bad news (except catastrophes – like Japan) . Last week they moved lower on bad news. How markets react to new is major forecasting tool. This is bearish long term.
  • Repeat/reminder“On May 20th Investors411 downgraded it outlook to NEUTRAL in anticipation of the June 30th ending of QE #2.”
  • Repeat/reminder The major question of the summer How far do markets have to fall, before the Fed jumps back in with liquidity  and says – we have your back?
  • If the Fed waits months to offer help then CAUTIOUSLY BEARISH should be the outlook.

  • Reading The Tea LeavesFrom late last week -”Growing a bit more bearish each day.” Clearly bears rule until US markets become so oversold that they are forced to bounce. (See Shorter Term Forecasting Indexes below)
  • Reading The Tea LeavesWhat was forecasted on May 20th is coming to pass, perhaps a bit earlier than expected. On all the charts of major US indexes, as predicted, we reached a series of lower highs and now lower lows.
  • NBThe Fed will still be pumping money into the economy (POMO or QE #2) until June 30th.  But it seems that investors are front running (getting out in advance) of that closing date. The fact that $ are still being poured into economy should soften the fall.
  • Mea CulpaMuch earlier this year I brought you Goldman Sachs outlook for the year – “A self sustaining recovery after QE #2″ – They have now admitted they were wrong. Investors411 Outlook  ” Investors411 looks for a much better first 1/2 of 2011 than second” (scroll down to statement in green) This long term forecast is dependent on the actions that the Fed takes.

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Shorter Term Forecasting Indexes

There are hundreds of forecasting tools, – These two tools have worked

When they stop working Investors411 will use other Indexes

  • The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] The US Dollar yesterday fell significantly -0.77%. For US Stocks = Bullish
  • McClellan Index(MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] MO fell  to -29.69 on Friday. Approaching oversold. Last two lows @ -50 and the one before that @-90 in March. Now = Neutral/Bullish

NB – There comes a time when a forecasting tool breaks down. – even temporarily. This usually has major significance in determining market direction.  The dollar’s drop was significant Friday, yet stocks also fell. This is BEARISH in the longer term for stocks. If US stocks can’t rally on a -0.77% fall in the dollar its time to sit up and take notice.

Reading Tea Leaves – Right now a fall on the MO to support levels of  -50 seems likely and -90 a distinct possibility this week. -50 would = a fall of roughly less than 100 Dow points.

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Positions

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

SLV/AGQ (very roughly 2x silver) Sold 1/2 for 3% profit. Have a sell order in on balance for 3% loss. (see comments section of blog.)

REMX(Rare Earth metals) Investors has a 1/2 position in this ETF

NLYAnnaly Capital Mgt. Ultra high dividend stock.

Very Short term high risk traders may have  a small bit of wiggle room to catch some more downside move by shorting or using ETF’s that short the markets (see below)

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Strategy - RepeatUntil we get a sign from the Fed that they has our back, buying the dip is out and selling into rallies is in. (unless you can find a superior stock – see Paul and other bloggers in comment section of blog.)

SDS ( double short S&P 500) & TZA (triple short small cap stocks) are the two ETF’s that ultra short stocks. Waiting for a rally to use them. However right now a rally of a couple days seems unlikely. Therefore waiting for more favorable conditions to buy or sell

Disclosure - I own SLV, NLY, REMX, & IMAX (the later should have been in  Investors portfolio)

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Check out the advice, recommendations, analysis by bloggers on stocks,politics and trends in the comments section of the blog Many of the best concepts regarding YOUR Financial Future are discussed their. Watch for Paul’s Corner every Tuesday and Thursday

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Longer Term Outlook

NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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