Thelma and Louise car.

Corporatocracy

Excellent Debate (scroll down) in the comments section of the blog yesterday. But to understand how politically radicalized/changed the USA has become you have to think outside the box and NOT in terms of Democrat against Republican. Everyone in the debate made some excellent points.

  • Obama/Democrats are sucking up to Wall Street and they love those corporate donations
  • Romney/Rebublicans – He IS a Gordo Gekko Investment Banker who is trying just as hard to suck up to Wall Street.

The simple undeniable fact is the USA is radically shifting away from a democracy of the people and toward a Corpocracy, (I like this spelling) by of and for major global corporations who run everything from think tanks to lobbyists to major media outlets Latest Example – EXXON has found a home of Fox News (I still boycott Exxon)

Almost all other democratic governments, especially those in Europe are focused on the rights of people. Here, aided by a recent Supreme Court decision our entire political structure is focused more on the major global corporations.

Globalized corporations bottom line is profits and if it means more profits they will hire abroad. They also can now grow faster by selling abroad to growing middle classes than a shrinking one here. Therefore You are growing more irrelevant in a profit driven globalized world.   Globalization, is driving the American shrinking middle class and our democracy off a cliff, but its the new reality.

You can foster it, accept it, or fight it or maybe its too late and you drive your car off a cliff. I happen to love my democracy. What’s most important is you recognize the radical change in our political world. We are Not in Kansas anymore

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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 +1.03% Down
NASDQ +1.48% Down
S&P 500 +1.26% Down
Russell 2000 +2.16% -

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Technicals, Fundamentals & Analysis

  • Another reduced, below average volume rally. This time a HUGE price move higher.  US stocks have rallied in light volume far more often than not since QE #2 started. (checkout the volume on the market index charts listed in column on right side of blog) Obviously High Frequency Traders & Fed Primary Dealers have something to do with this rally.

  • Alice in Wonderland – When you look at the chart of TZA (3X short small cap stocks) and many other highly leveraged ETF’s you see massive increases in overall volume. But when you look the major indexes or AAPL you saw weak volume yesterday and for months. The key word here is “HIGHLY LEVERAGED” entities is where the volume is.
  • No, I do NOT fully understand the above (I’m researching). High Frequency Traders, derivatives, puts/calls, Primary Dealers, Hedge Finds and may other factors and entities play a role. Its NOT your historical investors based stock market anymore. But when housing got way over (highly) leveraged you remember what happened in 2008.
  • It is my guesstimate that bond king, PIMCO’s Bill Gross is a Rand Paul libertarian. Its not a guess that he is very influential in the massive bond market. His following tweet about the potential form of QE #3 mid afternoon yesterday could influence traders.
  • The McClellan Oscillator (MO) chart exploded higher to -22.40 (anything below -60 = oversold, -30 = modestly oversold)  From yesterday Another “snapback” oversold rally is possible.  The last oversold rally was a dead cat bounce. = NEUTRAL (Obviously still a bit closer to overbought than oversold)
  • $USD The US dollar has fallen the last two days and may have established a lower high on its chart. Dollar is usually secondary to MO as a forecasting tool when the MO gets to oversold/overbought levels.  = bullish

  • Reading The Tea Leaves - Short term – Short and long term outlook would be far more bullish if we had a big volume confirmation rally today. However –  Staying with the same dead cat bounce pattern of lower highs and lows till it breaks down. Pattern in place since May 1
  • Reading The Tea Leaves Longer Term -  ”See May 20th blog for forecast for this summer.

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Positions

Below – Investors411  hypothetical portfolio that should outperform the S&P 500.

NLYAnnaly Capital Mgt. Ultra high dividend stock.

TZA - 3 times short small cap stocks Last week - Added another 1/2 position to TZA at 39.75 at/near open Wednesday.  Bought another 1/2 TZA position at 39.75 Thursday. Sold a 1/2 position near the open at 41.15 (see comments section of yesterday’s blog) for almost +4% gain. Combined with +8% gain yesterday = total of +6% on TZA with 1/2 position still open.

Gold/Silver – No trends except gold is out performing stocks and silver. A major editorial on this in near future

From yesterday -. May sell more early. Will add another full or 1/2 TZA positions on any modest market rally – This will be announced in comments section of blog – No modest, but a big rally at open in big volume so I sold. More likely to add TZA than subtract

Investors411 has recommends using TZA or SDS as a hedge/insurance against losses in NLY and especially if you own other dividend stocks (see past month+ blogs on dividend stocks.)  This way you protect prices of dividend stocks against falling prices and still collect the dividend.

Repeat Strategy remains

  • Short any rally - Investors411 will use TZA (3X short small cap stocks) and SDS (2x short S&P 500 more conservative) .
  • Sell long positions into any rally -

Disclosure - I own NLY, & TZA – I buy all stocks mentioned in the hypothetical Investors411 portfolio.

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Look for an enlightened Paul’s Corner every Tuesday & Thursday and the always informative comments section every day.

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The Fed has moved from an expanding money supply to a neutral – No QE #3. Congress is threatening to contract the money supply. “We [the USA] need to grow at this point more than anything else.” Investors411 outlook will remain negative on the USA unless the Fed and/or congress return to more pro growth policies.

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Longer Term Outlook

Neutral/CAUTIOUSLY BEARISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

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