Is it time for Investors to put on their helmets and head to the bunkers?

KISS & Stocks (Keep It Simple Stupid)

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


Index Percentage Volume
Dow -1.39% up
NASDQ -1.66% up
S&P 500 -1.69% up
Russell 2000 -2.72% -

Technicals, Fundamentals & Analysis

Investors411 record – 5 years of beating benchmark S&P 500

Mantra for the month - The Black Box/High Frequency Traders BB/HFT control the majority of trades. Paul R in the comments section has found a great source describing the BB/HFT traders and consequences of what they do.

Another increased above average sell off that has been typical of the BB/HFT controlled US indexes for many many moons.

Perhaps its time to bring  out the old  Lost in Space Robot with all its bells and whistles and scream DANGER WILL ROBINSON DANGER DANGER. This was the third big volume significant downside day in the last two months and that almost always means the worst is yet to come (The Hindenberg Omen?) But BB/HFT’s have made a mokery of this kind of technical analysis. So caution is in order but the Robot is peaking out of the closet.

Here’s what’s holding up US stocks (Clearly NOT the US economy which is deteriorating) – Emerging Markets

EEM the ETF for emerging markets was down about 1/2 of US indexes (-0.77%) How long can emerging markets can things to hold together in the USA (see Reading Tea Leaves)

Significant Indexes

  • The Dollar (USD)  [Anything price move over +/- 0.50 is significant. Doll moves inversely to stocks] The dollar rose +0.27% yesterday.  Almost two week trend = Neutral
  • The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Rally +3.66% yesterday. 5 week trend = Bullish
  • McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO fell to -27.32 = Neutral

Reading Tea Leaves

The good – The 5 week rally in the BDI is a clear sign that emerging market growth is continuing. China’s ( the #1 emerging market) stimulus worked, but almost overheated their growth. They have come down into a more normal range and are becoming more self sufficient every day.

The BadBack in 2008 Investors411 stated – the economic mess was far, far far, far, far bigger than expected (best example financial sector & this statement is still posted in POSITIONS section of blog) Economic mega trends (see OVERVIEW section of blog) have started to fracture both the USA & Europe economically. Neither has an abundance of cheap oil (peak oil mega trend)

The Ugly – Obama’s stimulus plan & tax cuts have halted the fall, but the jobs are still going overseas because of globalization mega trend. More jobs will be lost as the will for more stimulus fades. It’s election time and even a $60 billion (may have figure wrong) aimed directly at small business (“the engine of jobs growth”) and formerly supported by many Republicans was filibustered by those same Republicans. Nothing will get done in the next two months.

Longer term - 10s of millions of new jobs are being created each year in emerging markets. Millions more are graduating from universities in these emerging markets. When a computer tech will work 12 hour shift in China for $0.75 an hour and the same tech in the USA costs $18.75  for an 8 hour shift, who is Apple going to hire? (I made up the figures)

Just finished writting this and I’ve talked myself into and even more bearish position.  So lets go with the kitty in a helmet


The  Positions Section link to latest & former buys and sells  - These are positions I actually own

Current positions - EWZEWS sold 1/2 of EWS for 0.5% gain

Because of yesterday’s meltdown  held off on buying USO & will start with a smaller 2% stake in a dip today.

Long Term Outlook – NEUTRAL


  • Share/Save/Bookmark