Focusing on the Root Cause

The Governor of the Bank of England, Mervyn King, has expressed “surprise” that the public is not more angry with the bankers who caused the recession.

England’s top banking official had other warnings as well

“The evidence of the past is that the impact of a [financial] crisis like that persists for many years,” … You may not get it back for very many years if ever. It’s a very real hit on living standards. That’s why it is important to take the issue of financial stability very seriously.”

“I joined the Bank of England 20 years ago today… I don’t want to leave until we have a framework in place to ensure we don’t have to go through this again.”

It encouraging to see King  join Alan Greenspan in admitting where the fault lies.  Too bad everyone else is blaming teachers, firefighters, police, middle class Americans, immigrants, unions and just about anyone except our corrupt shadow banking system.

Guess Who Has Ka Daffy’ Money?

In yesterday’s blog Investors411 speculated that it was the US shadow banks. As one of you remarked in the comments section “true, true, true.” Backers of the psychopath dictator and mass murderer in Libya are Goldman Sachs, Citigroup, and JP Morgan. It turns out they have a huge hunk of this money.

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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 -1.38% up
NASDQ -1.61% up
S&P 500 -1.57% up
Russell 2000 -1.99% -

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Technicals, Fundamentals & Analysis

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

BUBBLE-ICIOUSInvestors411 term for the stock market – We are all riding on the outside of an ever expanding &  Central Bank manipulated stock bubble. See Investors411 STRATEGY section for more

  • The same old Fed manipulated stock bubble building trading pattern took a body blow yesterday
  • The impact of higher oil prices around the world has become a threat to globalized growth.
  • Stocks broke a 7 month long string of being up on the first day of the month.
  • Oil prices exploded to new highs along with gold yesterday.
  • This is not the building Fed manipulated bubble bursting, but  two other bubbles that may be bursting – No coherent alternative energy policy in the USA since President Jimmy Carter put solar panels in the White House & the US support for oil dictators. Both are bursting in our faces.
  • Today is a confirmation day for the breakout in oil. Oil prices are not at all time highs, but the breakout yesterday is significant.

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Shorter Term Forecasting Indexes

  • The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] Dollar rose yesterday +0.21%. This moderate rise enabled the dollar to close above its support level. Therefore, No confirmation of breakdown of support level. Oil prices now are by far the #1 forecasting index For stocks = Neutral
  • McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] Fell to to -15.44 Over the last three months the new parameters seems to be +/- 30 as an overbought/oversold level. Note: the +30 barrier has become a very strong resistance point. Getting close to +30 resistance level. Stocks outlook = Neutral

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Reading The Tea Leaves

A Danger Will Robinson Danger Danger moment is here.  The potential for a quantum shift in the outlook of the US and more importantly the world economic picture is upon us because of higher energy prices.

Its impossible to judge just how sever the impact will be, but one should certainly be cognizant of the fact that higher oil prices will negatively impact most stock positions.

There is a danger of more investors pilling on the panic that a new high in oil prices brings.

  • It sure looks like Libya’s oil is not going to reach markets for a long time.
  • The potential for revolution in other oil dictatorships is apparent.

Few saw Mubarak’s downfall coming and I wonder if investors are  again under estimating  the impact revolutions could have on the disruption of energy supply and the world’s economy.

So its time to bring out the old Lost in Space robot, because of the potential for at least a short term quantum shift in outlook for world economics.

The robot from the old TV show always warned young Will Robinson of impending danger by waving his arms and shouting – “Danger Will Robinson Danger Danger.”

Bottom Line - The longer KA DAFFY holds onto power the worse it is for the oil supply. The potential for other oil disruptions exists.

I’m reasonably sure of the major short term negative economic impact these revolutions will have. I’m not sure how much this can overwhelm the Fed’s liquidity dump in the USA.

Technically, today is an important confirmation day of the move higher in oil and lower in stocks. If we have confirmation then the robot will keep flashing its warning.

What to watch today

  • USO - ETF for oil - Oil up = stocks down
  • UUP - (Tracking ETF for dollar) Remember - The dollar is a contrarian indicator. Bad dollar = good stocks
  • AAPL – Bounced off its 50 DMA support level. As long as it hangs in above that everything OK

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Positions

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)(see comments section where all trades are first announced)

  • REMX (1/2 position, took 5+% profits already)
  • RJA 1/2 position, took 5+% profits already)

While the two above positions should outperform stocks, a spike in oil prices will hurt both. Will place a 3% trailing stop today on both.

I hope I’m wrong, but, it may be time to dust off those ETF’s that short and double short major indexes.  See positions section of blog.

Will post when I buy/sell in comments section of blog.

UCO -(2x oil prices)  Buy the dip. Why not, its a hedge against higher gas prices. Buy any small dip.

REMX (Rare Earth ETF) – Really believe this a good long term holding.  Hopefully longer term holding.

DGP – (ETF is 2X gold) . Set to follow silver and approaching breakout. Many web sites that focus on precious metals are calling this a manipulated commodity. A buy the dip ETF

DBC – (Commodities ETF) For a more complete list of commodity ETF’s see POSITIONS listed at top of blog  DBC is tilted to energy. Perhaps preferable or a good alternative would be *DJP that is more agriculture and metals or RJA (all agriculture)

RJA (Agriculture commodities Index)An ETNnot an ETF. Hopefully longer term holding. Stop set at @ 2 % below rising 50 DMA. UWM (2x small cap stocks) TNA (3X small cap stocks)

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Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See ”POSITION“ section of blog (at top of page) for lists of potential stocks & ETF’s including ”YOUR Stock List.” (YSL#4 is under construction.)

Longer Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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