Simon Johnson

The Christmas Can Can

Great Fun Video, Unfortunately when there is usually a 20 second add when over a million people see a You Tube video. (Thanks to MW for the video)

Chest Thumping – Koreas

North Korea says its ready for a nuclear “Holy War.” and South Korea vows “merciless counterattack” if attacked again. South Korea launched a “major land and sea exercise” today. Reuters Story

Obama and 2011

In the comments section of the blog both JS (who predicted START would pass) & EW have been supporting Obama as a realist and pointing to his accomplishments in the lame duck congress. Here’s part of EW’s comment yesterday -

“Let’s look at Obama’s results beyond the Tax Compromise.

1) After 17 years DADT legislation passed
2) 19 judges just put on bench (some held up for over 6 months)
3) Republicans withered and First Responders Act passed
4) START just passed 71 to 26

Now tell me you’re not happy voting for Obama instead of McCain/Palin.”

Its hard to argue with their logic, but a different, not  opposing, point of view from Simon Johnson in Bloomberg – “Tax Cutters Set Up Tomorrow’s Fiscal Crisis.” Johnson argues

“At this point, we will have only two choices: Raise taxes or cut spending…. But there’s a problem. The U.S. government doesn’t take in much tax revenue — at least 10 percentage points of GDP less than comparable developed economies –and it also doesn’t spend much except on the military, Social Security and Medicare. Other parts of government spending can be frozen or even slashed, but it just won’t make that much difference.”

So, since we’ve announced no tax cuts for the next 2 years -

To avoid the impending fiscal crisis we cut grandma and/or the military.

KISS & Stocks (Keep It Simple Stupid)

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



Index Percentage Volume
Dow +0.23% down
NASDQ +0.15% down
S&P 500 +0.34% down
Russell 2000 +0.01% -

Technicals, Fundamentals & Analysis

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

  • Typical melt up in light/abysmal volume. Nothing out of ordinary, especially in holiday week
  • Everyone’s bullish. You can’t help but come across article saying the sky is falling because there are too many bulls out there.
  • As Investors411 has repeatedly stated a whole lot of money has come out of Treasury Bonds recently (10 year T bill), but the abysmal shows its NOT going into stocks.
  • There are some, (I think a bit better case) who think the strong bullish sentiment is nothing to worry about.
  • And the bulls that think the NASDQ will run to 3000 next year
  • All major indexes again at new highs for the year.

Significant Shorter Term Forecasting Indexes

  • The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] The dollar was flat  +0.01% yesterday. = Neutral
  • The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China, emerging markets,&  exporting countries]BDI fell another significant amount -2.97% yesterday. This was a massive two day drop of 6.5% Real trouble here (for more see last few Investors411′s)= Bearish
  • 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 +22.79 From a low of -85 on Nov. 15th the MO chart shows a series of higher highs and higher lows. A bullish pattern. We just reached  the highest high. So, it might be time for  the MO to dip back down and create hopefully a lower high Still overall MO’s position is= Neutral

Reading The Tea Leaves -

Dark Clouds

Admittedly there is a good chance that we will go on marching ahead with the slow melt up. Investors411 has repeatedly descried the conditions that have set this in motion. They still exist. Old Wall Street Phrase – “Markets can remain irrational” longer than you can stay solvent”

But no one went broke taking profits and there are some short and perhaps long term dark clouds on horizon

  • BDI is falling too rapidly
  • MO is at a 6 week high (short term drop possible)
  • Rising yields on the T Bill or Treasury bonds (not critical yet, but going in wrong direction)
  • Rising oil prices. (not critical yet, but going in wrong direction)
  • Koreas (see above)
  • Too many bulls out there (see above)



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)

  • EEM - (Emerging Markets ETF) -1/2 positions sold
  • #1 UWM - (2x small cap stocks ETF) -
  • #2 UWM
  • EUO – (double short the EURO currency) Bought Friday at 20.76

Selling the rest of EEM this AM (about a 3+% gain) and 1/2 of the first UWM position. (about a 9+% gain) No one went broke taking profits. UWM is just too over extended, so taking some off the table and EEM is under performing US markets & the BDI sinking too fast. Investors411 did hold onto this position for over a month, sorry about it not being longer.

TYH - (3x techs) is a position that is not as over bought as UWM right now. Would consider it on a larger dip.

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)-

Longer Term Outlook - CAUTIOUSLY BULLISH


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