Albert Einstein is reported to have said that “insanity consists of doing the same thing over and over again and expecting different results”

Best Editorial out there on Bankster crisis in Europe begins with the above line and is from Financial Times

Yesterday’s vote that keeps the current Greek government in power was by a very narrow 7 vote margin (out of 300). We have years of these votes in over a half dozen European countries and obviously many more in Greece. Outside the Greek parliament a huge crowd of anti government protestors let their feelings be known. There were no pro government demonstrations.

This vote is close to the first P to K4 move in more than a half dozen European debt chess games. This crisis is just starting and going to be here for years to come. The FT editorial calls for some pre-emptive solutions. I hope they come to pass.

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Bond King – Bill Gross – “I simply think a default of six, twelve days, eighteen days, not only sends the wrong signal, but a disastrous signal to the world credit markets,”  Republicans are threatening this.

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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 big rally Up
NASDQ Up
S&P 500 Up
Russell 2000 -

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Technicals, Fundamentals & Analysis

  • US socks had a major rally in increased, but below average volume.
  • Major fundamental reason for rally - the anticipation of Greece’s government (socialists) staying in power. Vote 155 – 143 – 2 abstained with large crowd of anti government protesters outside. The opposition is center/right parties. This the opening move of perhaps a half dozen chess games on possible default/restructuring of debt in European countries that will take place over next few years. Latest is Credit Default Swaps in Greece are rising this AM
  • From last Friday. “The Silver Lining” was too many investors were buying Put positions. With an imbalance or multi year high of short positions a whole bunch of short term traders were caught on the wrong side of  a rally. The following is a link to the chart of the Put to Call ratio. It now shows a slightly below average put/call ratio. Investors411 will use this forecasting tool in the future when the Put/Call ratio gets out of balance.
  • The McClellan Oscillator (MO) chart rose to +27.25 ( below -30 = somewhat overbought, above +30 somewhat overbought ) The MO has been unable to get above the +30 to +50 range for 6 months. So it sure looks like our four day rally will run out of room very soon. = Neutral/Bearish
  • $USD The Dollar fell a significant -o.72% yesterday. ( +/- 0.50 is a significant move)  The trend since May 1 is bullish, but the last few days are ruled by bears. For stocks trend = Neural/Bearish

  • Reading The Tea Leaves - Shorter term – MO shows we’re technically entering overbought territory. Advantage bears. Can’t help thinking all those put positions were the reason for the rally. Now that the # of Puts is back to normal, we are close to overbought, and only a week and 1/2 of Fed money remains to juice stocks the bears case should gather momentum.
  • Reading The Tea Leaves - Longer Term – No change.

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Positions

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

NLY - Annaly Capital Mgt. Ultra high dividend stock. Bought about a month ago.

TZA - ETF that is 3 times short small cap stocks Bought 1/2 TZA position at 39.75 about  10 days ago. Have already cashed in a 6% gain in TZA. The remaining 1/2 TZA now at 37.71 almost a -6% loss.

The short term player in me wants to sell this position (futures are down so TZA will rally at open) and buy back in at a better point. The long term investor wants to hold onto this. I’m leaning short term.

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 as well as a group of dividend stocks – 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 and/or Euro defaults are solved.

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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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