Cygnus atratus photographed in January of 2003 using a Canon D60 digital camera and Canon 100-400mm image stabilized lens

Nassim Taleb – “BlackSwan”

Black Swan

There are many doom and gloom prognosticators out there. There are a lot of Johnny Sunshine’s too. Paul R comment’s are today’s editorial. Checkout the other excellent recent comments too. I strongly urge you to also read the 10 points in his referenced Financial Time article.

“Back on Feb 10 Barr mentioned the “Black Swan”. I caught the Wall Street Journal Report on TV last week and they interviewed Nassim Taleb author of many Black Swan articles.

A quick search of the net for “black swan” I found his recommendations for a black swan proof world. LINK

http://www.fooledbyrandomness.com/tenprinciples…

I really like #2.

2. No socialization of losses and privatization of gains. Whatever may need to be bailed out should be nationalized; whatever does not need a bail-out should be free, small and risk bearing. We have managed to combine the worst of capitalism and socialism. In France in the 1980s, the socialists took over the banks. In the US in the 2000s, the banks took over the government. This is surreal.

Bottom Line – Nassim Talib – who was right about the 2008 meltdown wrote this article on April 7 2009.

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!

Index Percentage Volume
Dow +1.25% flat
NASDQ +1.14% flat
S&P 500 +1.50% flat
Russell 2000 +1.45% -

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

Technicals, Fundamentals & Analysis

Markets recovered a bit on Friday. Some of this may be options expiring.  Nothing to get excited about because as state Friday major support levels and trend lines have been broken.  This usually means the worse is yet to come.

We moved higher because markets were way oversold (See McClellan Oscillator)

Fearless Forecast Last week – Down market at beginning of week and rally at end – was right. But overall prediction of “up week” was obviously toast.

Fearless Forecast This Week - Trend lines and major support levels have been broken. I think European Central Banks like our Fed and Treasury will do whatever it takes to stabilize the Euro.  But the long term damage to their GDP is significant and impacts the world. Hard to see a market recover if GDP is falling. Systemic problems in capitalism and social welfare have to be fixed and this is going to hurt. More investors realize this and sell this week.= Down week.

Obviously expect a roller coaster ride again. Idiot Democrats and Republicans have NOT fixed the “too big to fail” or over leveraged problem that got us into this mess. About 1/3 of the Senators get it – Those that voted for Brown/Kaufman legislation.

Significant Indexes

  • McClellan Oscillator rose to -90.99 yesterday.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is OVERSOLD territory. = Bullish. Repeat -Hate to say this, but once the trend broke this index has become less effective.
  • US Dollar – Friday the dollar fell again to $85.36 Down a significant -0.52% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important . . Obviously European & other Central Banks are stepping up to buy the Euro.  Looks like this will stabilize the Dollar/Euro relationship at least for now This is good news but markets have failed to move higher on good news = Bearish
  • VIX- The “fear” index is at 40 and back in Oct. 2008 it reached 90. We have a ways to go before we reach 2008 fear levels.

Stock markets are totally ignoring their record oversold conditions and the drop in the dollar. Major trend lines have been broken. Bad reactions to good news is a powerful warning sign that the worst is yet to come. Technically, Friday’s gains need a confirmation and trend line reestablished before going long.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

The whole positions section has been refurbished. Many thanks to one of you who wants to be anonymous who helped.

Usually most positions have stop/loss orders 5 to 7% below what they were bought for. The 12% loss in UWM was due to the fact that UWM gapped lower the next day. The huge 40+% gains in IMAX was because they wee bought months ago.

Forgot to mention Friday a 2% position in VCI.

Purchases made on Friday all have stop/sell orders on them at or @2% below the price they were bought for.  Except for 50% of IMAX. and 100% of VCI. Their stops are a bit lower.

NB – Would NOT invest now, but if you are an experienced short term trader you could nibble. – Only on huge dips. Don’t make the mistake I did and hold short term positions over weekend. Get in , make 5+% profit , sell 1/2 and let the rest ride, or get out.

Friday – we saw the Dow dip 100+ points even after the McClellan Oscillator was at a record low of -136. So the dip would have too be quite large before nibbling again.

Bottom Line – Now is not the time to think about going long but  to start to think about using SDS and similar ETF’s that short the market (2X short S&P 500) in a rally.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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