Poster from 1880

Your Comments

The Day Democracy Died – or the Corporate takeover of America – has received more of YOUR comments (7 public and 4 personal) than any other editorial. We the People , in the USA,  has become We the Corporation. Check out all the insightful public comments (scroll down). Most are listed on the right side of blog.

Fundamentally Democracy has changed in the USA. Investments are taxed at 15% and working class Americans are taxed at

  • $8350 to 33,950 = 15%
  • $33,950 to 82,250 = 25%
  • $82,250 to 171,550 = 28%
  • 171,550 to 372,950 = 33%
  • above 372,950 = 35%

Bottom line here is that our tax structure encourages investment/gambling on corporations for a living rather than working for a living. People like me are spending more and more time investing/gambling , in part because of the lower tax rates rather than working.

Bottom Line This adds to the destruction of the work ethic in America . It also make the wealthy who own most stocks, (trust fund children, hedge fund managers, those in the ultra upper class) wealthier. Again the corporations win and working Americans loose.

Even Investors411 is kind of a Dr. Jekyll & Mr Hyde by offering investment/gambling advice while at the same time recognizing that we are all (as one of you put it) on the Titanic (perhaps a better name would be the Good Ship Democracy) rushing from one side to the other.

There is a quantum shift in that investment advice below

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 -2.09% down
NASDQ -2.67% down
S&P500 -2.21% down
Russell2000- -1.79% -

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

Technicals, Fundamentals & Analysis

See Positions , Strategy , and Overview for changes made over weekend.

US stocks got toasted in HUGE volume – AGAIN – Technically – It’s starting to look like a market that is going elliptical to the downside  or a climax sell off. Four reasons were given for stocks big drop this week.

  1. China – China was going to tighten credit and therefore growth would slow.  The BDI which measures the flow of goods, specially China imports shows no signs of collapsing  (see below)
  2. Obama will go after shadow banks . If successful this would mean to big to fail firms like Goldman Sachs will be broken up into several pieces.  All the shadow banks can now (Supreme Court decision) spend whatever they want (including your tax dollars and the trillions that the Fed is loaning them at 0%) to prevent this.  It’s an election year and within the Obama administration Bernanke, Geithner & Larry Summers are solidly behind the too big to fail banks. Summers even helped to write the legislation that created shadow banks.
  3. Bernanke will not get reappointed – Bernanke was one of the arsonist who brought the world to edge of an economic meltdown and one of the firemen to bail it out. If Bernake’s appointment goes down so will stocks. The uncertainty created by a new Fed chair would hurt stocks. But according to most reports Bernanke has won needed support over weekend .
  4. There is no V shaped recovery – My best read of the tea leaves is they are right as far as the economy/jobs are concerned. But earnings reports are showing a lot more  big companies with international exposure are beating earnings on the top and bottom lines.

Relevant indexes

  • McClellan Index ($NYMO) at -79.33 = significantly oversold .  Well beyond the  @-60 or oversold level.
  • BDI -  The BDI/China has come down from highs in mid November. The Baltic Dry Sea Index has leveled off over the last month and started up the last two days.

Two events, outside of earnings which have been rather  good, significantly impact stocks - The Bernanke appointment (Tuesday) and Obama’s State of the Union (Wednesday)

Long term Outlook has changed to NEUTRAL because some key technical levels were broken in big volume.

Positions

The  Positions Section (also at top of blog) has the latest buys and sells (Usually updated over weekends)

These are positions I actually own

I’ve set up two charts. Put them on a split screen and compare. Both are 18 month charts McClellan Oscillator & the S&P 500 Notice that only 4 times in the last 18 month has the McClellan dropped below 80.  Each time it rebounded. It did reach @120 – 3 times  The Oct. 2008 meltdown, The March lows after the Obama election and a 6+% November correction .  3 times the McClellan has reached 80 and rebounded. Once it reached 100.

Bottom Line – chances are good we are going to see some sort of rebound this week. US markets are oversold and could go lower, but this looks like a good place to add 10 to 20% .  If McClellan goes lower (past 100) I’d add more. Fundamentally -  the situation is no where near as bad as it as at the beginning of 2009.  Working class American’s are going to suffer – but stocks with International exposure to emerging markets are going to flourish.

Everybody else is selling, now we start to buy.

SELLING & BUYING

More on exact buys and Sells on Monday.

See POSITIONS (scroll down) for details on this and what’s under consideration for 2010.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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