Blowing Our Own Horn

What other financial/political website has this kind of record?

  • 6 years beating the S&P 500
  • In April recommended you  be long SLV (silver) and you made +20%, Then warned to get out because silver was too high/overbought
  • Then recommended double shorting silver (with ETF – ZSL) and  you made over 35% in May (don’t think we’ll repeat this anytime soon)
  • Run three “YOUR stock list” who have clobbered the S&P 500 in results. The jury is out on YSL #4.
  • Gives you the reasons behind the stock market moves.
  • Has Paul’s Corner on stock analysis
  • All this and some left of center politics too.

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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 -1.10% down
NASDQ -0.48% down
S&P 500 -0.91% flat
Russell 2000 -0.44% -

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Technicals, Fundamentals & Analysis

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

  • TREND - A massive buildup of liquidity driven (Fed POMO program/quantitative easing) into inflation hedges or commodities is melting down
  • This started in silver (4 huge days of selling) and spread to oil (down 10% yesterday) and significantly to other commodities.
  • TREND – Investors now fear deflation and/or a double dip recession more than inflation.
  • The commodities fall has put investors on edge
  • Key data points yesterday: Europe does NOT lower interest rates & weekly unemployment numbers  for USA significantly higher.
  • World markets   & oil continue to fall on bad US weekly employment numbers.
  • Downward revision in weekly’s and huge increase  in WEEKLY unemployment probably more significant than monthly employment numbers. Monthly could act as confirmation.
  • Monthly jobless numbers at 8:30 EST are  - Unemployment hits 9.0% and job increases to +268,000 for private sector last month and revised upward for previous months.

This is a big positive surprise and will mute some of the trends listed above and below

That was written before the jobs report

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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] Dollar rose a VERY significant /MASSIVE +1.60%. Sure looks like dollar bulls won the week long war (see yesterday’s Investors411) For stocks = Bearish
  • McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] Fell  to -31.08 Below zero which is bullish, but not yet overbought = Neutral

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Reading The Tea Leaves

In the War over the dollar, the dollar bulls scored a major victory yesterday. Dollar bears are fleeing.  Of course for US stocks this is a victory for the bears

What happened

  • A massive buildup in hedges against inflation is unwinding.
  • This was driven by Fed liquidity (see above) and we saw a massive speculative bubble build in silver.
  • This bubble broke when the CME raised margin rates on silver
  • It spread to oil – down double digits like silver and other inflation hedges/mostly commodities
  • Investors now fear a double dip recession and/or deflation more than inflation.

What to watch today - Forget stocks and watch the dollar

  • UUP - (Tracking ETF for dollar) Remember - Usually the dollar is a contrarian indicator for stocks. Any major fall may give temporary help to US stocks, but a major breakdown also signal major structural problems with the USA.

Prediction from yesterday – Reading Tea Leaves - “Short term victory for dollar bulls (dollar goes up) and long term victory of dollar bears.”

What me worry?

BOTTOM LINE - Check out silver chart Almost nothing with this much downside momentum stops on a dime.  We have a huge mountain of speculative anti inflation hedges that need to unwind.

HoweverAll this money is coming out of some stocks, but mostly the  massive amounts from commodities. Also there is almost two months more of the Fed quantitative easing. All this money has to go somewhere. So after we get  unwound in speculative commodities and investors have no other place to go to get  reasonable returns, money should flow back to stocks. At least that’s what my friend Alfred E Neuman tells me.

So once again  in our Fed manipulated/managed economy when stocks get oversold (The MO hits -60) Investors411 will buy.  But for now shorting commodities works. (See below) Stay with the trend till it stops.

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Positions

See ”POSITION“ section of blog (at top of page) for lists of potential stocks & ETF’s including ”YOUR Stock List.”

Disclosure - I have personal ETF positions in REMX, ZSL (major position double short silver) and manage a fund that has a 5 year position inGLD.

  • ZSL rallied a huge +11.07% two days ago and +25.14 yesterday.
  • The collapse or unwinding of the commodity trade is spreading. First silver spread dramatically to oil and significantly to other commodities. Looks like it will continue.
  • Therefore any ETF that shorts or better double shorts commodities is a decent play.

Jobs report surprise has put a damper on the concepts suggested above. It was written before the jobs report. The monthly jobs report says we need to worry more about inflation than deflation So taking some profits on shorts may work.  No one went broke taking profits.

My read of the tea leaves is the bump from the monthly jobs report will get tempered later in the day and right now the deflation argument stronger.

Remember there a lot of Fed driven $ out there looking for a place to park.

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Longer Term Outlook

CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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